How to spot pension fraud before it’s too late

Your pension is probably one of the most valuable assets to your name – so the idea of someone accessing it and stealing your accumulated wealth is not a pleasant one.

Yet according to the latest figures from Action Fraud, this scenario happens to hundreds of people each year. Fraudsters stole around £17.7 million from UK pensions in 2023, with the average individual loss standing at nearly £47,000.

Even if you feel confident that your pension is safe from criminal activity, it’s worth knowing how pension fraud actually happens and how to spot red flags before it’s too late.

Keep reading to find out what you need to know.

How fraudsters steal pension savings in 3 simple steps

Generally speaking, this is how pension fraud unfolds.

1. Target pension holders using sophisticated tech

Financial criminals don’t have one “prime target” demographic. Typically, they target older people who may have less technological knowledge and are more easily duped by fake websites or phishing emails.

However, even if you are more in touch with the digital world, you’re not necessarily safe. Advances in AI have enabled scammers to convincingly impersonate pension providers, so even if you look closely, you could miss the signs.

You could be contacted:

• By phone
• By text, Facebook Messenger, or WhatsApp
• By email
• By post.

No matter the size of your pension pot or how old you are, it’s important to remain vigilant.

2. Make false promises

In films, financial fraud usually involves a hacker breaking through digital systems and stealing money from a person’s bank account. In the real world, scammers usually convince pension savers to transfer their money willingly.

They do this by making false promises. If your pension has not been growing as you hoped, or you’re approaching retirement and feel worried about affording the lifestyle you want, you might look for options with the potential for higher returns. You might also be looking into consolidating your pension if you have several pots.

After successfully contacting you, pension fraudsters may offer a tempting transfer opportunity that falsely promises better growth and lower fees. They could spend a lot of time talking to you about your “options”, impersonating a caring adviser or provider when in fact, they are looking to steal from you.

3. Access your money

Finally, they seal the deal by accessing your funds.

This can happen by:

• Asking you to transfer your pension into a new “scheme”
• Requesting login details so they can “manage the pension on your behalf”
• Convincing you to withdraw your pension as cash, if you’re old enough, then “reinvest” it.

While some advanced scammers attempt to remotely access your devices and steal your information, it’s more common for victims to be persuaded to hand over the details themselves.

How to spot and prevent pension fraud in 3 easy steps

While there is a worrying amount of pension fraud happening in the UK, you can safeguard your wealth by learning to spot the warning signs.

1. Never entertain unsolicited contact

In 2019, the government made pension cold calling illegal. So, if someone calls you to talk about pensions, it is almost certain that they are trying to scam you.

Although it is not illegal for pension providers to contact you by email or post, they usually only do so for general advertising, rather than reaching out to you directly. If you haven’t requested contact from a provider, treat any personal communications with suspicion.

A registered pension provider or financial adviser/planner will never:

• Advertise a time-limited deal
• Promise higher-than-average investment returns
• Tell you it’s possible to get your pension early
• Pressure you to make a quick decision.

If you suspect someone is trying to defraud you, remember to contact Action Fraud or your local police.

2. Do your research

There are ways to verify if an adviser or pension provider is legitimate.

The Financial Conduct Authority (FCA) regulates the financial services profession. Anyone qualified to advise on or manage pensions will be registered with the FCA, and you can check their credentials on the Financial Services Register to gain peace of mind.

3. Work closely with a registered professional from Kellands

We understand that navigating your pension (and most other accounts) online may make you feel cautious. While digital finance makes saving and investing more accessible, it can also raise concerns about your money being vulnerable to fraudsters.

When you work with us at Kellands, our experienced team will oversee your wealth – not to take control away from you, but to ensure it’s safe from bad actors. You will remain in the driver’s seat; our job is to protect what you’ve earned and help you put it towards a brighter future.

To find out more, email us at hale@kelland.co.uk, or call 0161 929 8838.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Workplace pensions are regulated by The Pensions Regulator.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.

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