Pensions Scams

Find out how to avoid being caught by fraudsters and duped into pension scams.

In the UK people are living longer, healthier lives.  As a result they will become more interested about how they are to survive when they retire from working life.

Following on from April 2015 and the UK Government’s overhaul of the rules governing pensions, people will be increasingly anxious to understand what the new rules are and how they affect them.  This presents an exciting opportunity for fraudsters who will look to take advantage of the situation.

At Unlock My Pension we have taken a close look at the rules governing access to and use of pensions.  Here we give an overview of what to look out for, and how to avoid being caught be fraudsters and duped into pension scams.

What are the rules?

There are a variety of different Pension schemes available in the UK.  As of April 2015 people have had greater freedom to decide on how they want to use their pension income and when they can have access to it.  However there are still rules on how this can be done.

Generally in the UK, most pension pots cannot be accessed before you turn 55.  These are some exceptions to this, but these tend to relate to situations when you have been in particularly bad health and are unable to support yourself.      Furthermore there are limits on the value that you can remove from your pension pot that will not be taxed.  Under the new rules 25% of your pension can be withdrawn tax-free, with the remaining value being subject to income tax on the year that you withdraw it.

What is there to worry about?

This change in the rules governing access to pensions is the biggest in recent history.  Fraudsters may present themselves offering you the chance to:

  1. Access your pension before you turn 55;
  2. Withdraw more than 25% of your pension tax-free as a lump sum; or
  3. Offer advice in, as of yet, untapped investment opportunities that guarantee significant returns.

Fraudsters can be very clever, and may even be able to provide paperwork to prove their legitimacy and that of their claims.  They may also be able to boat impressive websites that detail their expertise and credentials, and use convincing language like ‘pension liberation’ and ‘pension loan’.  The reality however is that the kind of promises listed above almost definitely part of a pension scam:

  • As mentioned earlier most people will not be able to access their pension before they turn 55;
  • While you may decide to take more than 25% of your pension as a lump sum, anything above a 25% withdrawl will automatically be deemed an ‘unauthorised payment’ by HMRC.  This will result in your withdrawl being taxed at 55%, dramatically reducing the health of your pension pot.  In most circumstances you will not be told about any additional tax implications.  This could have implications for your long term financial health after you retire; and
  • Contrary to what many people believe, it is almost impossible to find an investment opportunity that will guarantee significant returns.  Investments are by their very nature risky endeavours, and should only be entered into having taken detailed advice from experienced professionals.

There is another important reason to be vigilant against fraudsters.  If you do end up in the situation where you have been duped into a pension scam, or have given fraudsters access to your pension, there is no going back.  The Government is taking active steps to try and route out fraudsters before they contact you, but you must also be very careful about how you access your pension.

What should you watch out for?

There are a few simple steps that you can take to avoid being caught out by fraudsters attempting to gain access to your pension:

  1. In all likelihood you may be contacted by an unsolicited phone call or letter, advertising a scheme whereby you can access more than 25% of your pension tax free, or before you turn 55.  This is sometimes called ‘pension liberation’.  It is important to keep in the back of your mind that this is illegal.  Furthermore you should be very wary of disclosing information regarding your financial affairs to unsolicited contacts;
  2. Do not listen to anyone that attempts to rush you into a transaction, claiming that an investment is ‘time sensitive’ or ‘for one day only’;
  3. If you have been approached about transferring your pension, speak to an independent advisor who will meet with you face-to-face to discuss your affairs;
  4. Be very wary of any investment opportunities outside of the UK as they are not covered by the Financial Conduct Authority (FCA) and their viability cannot be assured; and
  5. Only deal with organisations that are approved by the FCA.  This information is available from the FCA website at

The threat that fraudsters pose to you and your lifelong savings is quite real, and they will likely employ a number of techniques to trick you.  They will put forward a convincing case that their process for ‘pension liberation’ is completely legitimate.    However if you are vigilant, judicious, and follow a few basic steps you will be able to protect yourself against fraudulent activities.


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    UK Pensions Guide

    Our Pension is something that we must all consider at some point in our life.

    Pension Unlocking

    Greater freedom to decide how you use the money that you have saved on your retirement.

    Pensions Scams

    Find out how to avoid being caught by fraudsters and duped into pension scams.