Millions of Savers at Risk of Pension Scams

Regulators warn on pension scams after sharp rise in fraudsters targeting those approaching retirement

Holly Black 7 August, 2019 | 5:59AM
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Five million pension savers are at risk of falling victim to fraudsters, according to The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR), which are warning savers to be wary of being drawn into scams.

Worrying research by the two regulators has found that around 42% of people are likely to fall for at least one of the six common tactics used by pension scammers.

Scams have been on the rise since the introduction of pension freedoms in 2015. New rules that came into effect gave savers more flexibility over how and when they access their retirement savings. But it has also become an opportunity for fraudsters to con people out of their life savings.

Cold calls about pensions, offers of a free pension review, claims of guaranteed high returns on investments, exotic investments, time-limited offers and promises of access to pensions savings before age 55 are some of the most common temptations used to lure vulnerable savers.

Research by the two regulators found that even savers who consider themselves to be financially savvy are just as likely to be persuaded by fraudsters’ tactics as anyone else. Some 23% of those aged 45 to 65 said they would likely invest in esoteric options such as forestry, storage units, overseas property or renewable energy bonds if they were offered high returns.

But such opportunities are often a wild west for investors; they are frequently not regulated, meaning investors have no protection if they are mis-sold or the product goes wrong, or they may not even exist.

Common Scams

Some 23% of those surveyed said they would speak to someone who called out of the blue asking about their pension, while 10% would accept the offer of a free pension review. A further 17% revealed they would be likely to fall for a scam if they were offered early access to their pension savings. This has been a common ruse since the introduction of pension freedoms. And while it is possible to access cash in a pension before age 55, the firm arranging the deal will take a huge cut of the saving pots and savers will be left with a 55% tax bill.

Psychologist Honey Langcaster-James said: “Most people are confident in their ability to avoid being scammed. We tend to assume it would never happen to use because we think we’d notice if something wasn’t right. But even the smartest and savviest among us can become victims of crimes. Sophisticated scammers take advantage of this and use powerful psychological techniques to build trust and rapport and ultimately influence our behaviour.”

Victims of pension fraud lost an average £82,000 each in 2018 as fraudsters continue to perfect their tactics and come up with new ones. The regulators are urging pension savers to be cautious in their ScamSmart campaign and to check they know exactly who they are dealing with.   

Tom Selby, senior analyst at AJ Bell, says: “Scammers’ tactics are evolving all the time and increasingly we see complex schemes promoted online through social media. While huge strides have been made in tackling pension and investment fraud, this research shows a worryingly large number of people are at risk of falling victim to common tactics used by fraudsters.”

Guy Opperman, minister for pensions and financial inclusion, said: “Pensions are one of the largest and most important investments we’ll ever make and robbing someone of their retirement is nothing short of despicable.”

How to Protect Yourself Against Scams:

  1. Reject unexpected pension offers – whether they are made online, over the phone or through social media
  2. Check who you’re dealing with – check the FCA register or call the regulator on 0800 111 6768 to ensure the firm you’re speaking to is authorised
  3. Don’t be rushed or pressured into making any financial decision
  4. Consider getting impartial information and advice


The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Holly Black  is Senior Editor,


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