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PENSION SCAMS
How are individuals targeted by pension scams?
Pensions are changing. From April 2015, pension scheme members can access their
pension savings in new ways.
Scammers are targeting savers with promises of one-off investments, pension loans or
upfront cash. Most of these are bogus. Pension scam models are also changing. Many
scammers are directing members to transfer into single member occupational schemes in
an attempt to escape scrutiny.
If the member is under age 55, they cannot release their pension unless they are in ill
health. If members are over 55, they can release funds from their pension from April 2015.
They may still be at risk from scammers. Trustees and administrators should make sure
they signpost their members to the Government’s Pension Wise service to understand their
options.
For more information, visit the Government’s “Pension Wise” website at
https://www.pensionwise.gov.uk/
Members with defined benefits must take appropriate independent advice from an FCAauthorised adviser before transferring their benefits from April 2015. You might also want to
encourage members with defined contribution benefits to take advice before making any
decisions.
Here are some of the most common tactics used by pension scammers to trick savers out
of their savings:
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A cold call, text message, website pop-up or someone coming to their door offering
them a ‘free pension review’, ‘one-off investment opportunity’ or ‘legal loophole’.
Convincing marketing materials that promise someone returns of over 8% on their
investment.
Paperwork delivered to their door by courier that requires immediate signature.
A proposal to put their money in a single investment. In most circumstances, financial
advisers will suggest diversification of assets.
They may claim that they can access your pension before age 55.
Transfers of their money overseas.
What action is being taken to tackle pension scams?
The Pensions Regulator continues to investigate reports of pension scams and will continue
to work with the pensions industry, other government agencies and law enforcement
agencies to ensure liberation is prevented, deterred and disrupted.
Their powers to ensure that members are protected include :
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suspension and / or prohibition of trustees
appointment of new trustees to schemes
issuing of financial penalties
freezing and repatriating pension scheme monies
Delaying transfer payments
It is not possible to waive a trustee’s legal duty to carry out a transfer within 90 days.
Trustees have a duty to carry out such a transfer wherever the legislative requirements are
met. This includes that the member has made a valid application to the trustee.
Any future regulatory action that may be taken cannot be predetermined. However, where
the transferring trustees or administrators can provide evidence for concerns that member
funds may be at risk, then this would be a factor that to consider when deciding whether to
take action in respect of the non-payment of a transfer.
For example, a trustee may obtain evidence that following a member’s transfer, cash would
be passed back to the member before their normal minimum pension age. We would give
this factor significant weight when assessing whether it would be appropriate to pursue any
action in relation to a non-payment of a transfer.
It is expected that trustees or managers will be able to demonstrate that they have taken
steps to establish the legitimacy of an arrangement where they have delayed making a
transfer for that reason. If you are concerned about processing a transfer request you may
wish to seek your own legal advice.
Approved Financial Advisers
The Financial Conduct Authority (FCA) regulates firms and individuals that provide financial
advice. If someone claims to be a financial or pension adviser then members can check
with the FCA to make sure they are approved. It’s important that members check this
before they act on any pensions advice that they receive.
The FCA also regulates those responsible for operating personal and contract-based
stakeholder pension schemes. If you are concerned that a member of your scheme may
have been targeted by a scam, then you can check whether the receiving pension
arrangement is authorised by the FCA.
Visit the FCA register to perform these checks. If you have concerns about a firm or
individual appearing on the register contact [email protected]
Tax-registered pension schemes
HM Revenue and Customs (HMRC) is responsible for administering and collecting taxes.
This includes an online registration service for UK pension schemes so that they can
receive tax relief on contributions.
The pension tax rules protect the tax relief given on pension savings. These rules are
designed to make sure that pension savings are used to produce an income throughout a
saver’s retirement. They set out how and when pension savings can be accessed, as well
as the tax charges that apply where the conditions are not met. If a member has accessed
their funds improperly, ‘unauthorised payment charges’ will apply.
For a checklist of features of a potential scam, including non-registration for tax
purposes, see our action pack for trustees and administrators. If a scheme isn’t registered
for tax purposes, then do not process a transfer and notify Action Fraud.