There are many different types of pension scam – just as there are many types of genuine pension scheme. This can sometimes make it difficult to tell the difference between a genuine pension arrangement and a pension scam which will most likely decimate your retirement funds.
Fortunately, there are some common tell-tale signs that mean you could spot a scam and avoid it:
- Cold calling: always be suspicious of a cold caller. This can come as a text, phone call, email or even a smart-looking individual at your door!
- Hard sell: when your smart-looking/sounding “adviser” won’t take “no” for an answer and pressurises you into an on-the-spot decision
- No land-line contact phone number: the only contact they give consists of an email, mobile or PO Box address
- Use of words like ‘pension liberation’, ‘loan’, ‘loophole’, ‘free pension review’ or ‘one-off investment’
- Unrealistic claims:
- You can unlock your pension before 55
- Promises of tax advantages
- investment is ‘unique’, ‘overseas’, ‘environmentally friendly’, ‘ethical’ or in a ‘new’ industry
- Low risk but high return investments (THEY DON’T EXIST!!)
What the scammers don’t tell you is that taking any part of your pension early (before 55 years of age) DOES result in tax charges. These charges can be up to 55% of the amount you take – even if you were told it was a “loan”.
With HMRC on your back for this tax demand, it will be hard to remember the pleasure of the money you received. Plus, whilst you are distracted with your tax demand from HMRC, it is likely that the rest of your pension fund is taking a nasty tumble.
Pension scams can involve various types of pension arrangements from QROPS and QNUPS to occupational schemes and SIPPS. These arrangements are not, in their own right, bad. However, if they are used for unsuitable investments, they most certainly can be.
The investments inside the schemes can range from high-risk, professional-investor-only structured notes to toxic, illiquid, risky UCIS funds (Unregulated Collective Investment Scheme – illegal to be promoted to UK residents). Whilst these types of investments are not illegal in their own right, they are only suitable for certain people with deep pockets and sound investment experience. Or, alternatively, they are totally unsuitable for pension funds – full stop.
When taking advice on transferring your pension fund you should always ensure the adviser you choose is either based in the UK OR in the country you reside/plan to reside in. Alternatively, you must make sure the adviser is regulated and qualified for pension and investment advice in the jurisdiction where you reside.
Some of the pension scams that we are aware of are Ark, Capita Oak, Evergreen QROPS, Henley Retirement Benefit Scheme, Westminster, Trafalgar Multi Asset Fund, Continental Wealth Management (CWM), London Quantum. The underlined scams are being investigated by the FCA.
The 5 pointers from the Pension Regulator are:
- If you think you’ve been scammed – act immediately
- Cold called about your pension? Hang up!
- 3. Deals ‘too good’ to be true
- 4. Using an adviser? Make sure they’re registered with the FCA
- 5. Don’t let a friend talk you into an investment – check everything yourself
If you’ve already signed something you’re now unsure about, contact your pension provider straight away. They might be able to stop a transfer that hasn’t taken place yet.
If you think you’ve been targeted by an investment scam, please report it to the FCA using their reporting form.
If you have lost money to a suspected investment fraud, you should report it to Action Fraud on 0300 123 2040 or online at www.ActionFraud.police.uk.
If you have doubts about what to do, ask The Pensions Advisory Service (TPAS) for help. Call them on 0300 123 1047 or visit the TPAS website for free pensions advice and information.
Beware of being targeted in the future, particularly if you lost money to a scam. Fraudulent companies might take advantage of this and offer to help you get some or all of your money back.
With out due diligence and knowledge you often won´t realise that you are the victim of a pension scam until its too late.
Therefore Pension Life has written a series of blogs about pensions, pension scammers and how to safe guard your pension fund from fraudster. Please make sure you read as many as possible and ensure you know everything you should about your pension fund. If we can educated the masses about pension fraud we can stop the scammers in their tracks – globally.