Beware fraudsters offering a 'free pension review'

9 November 2016

Savers have been given a fresh warning by the Financial Conduct Authority (FCA) to watch out for fraudsters targeting their hard-earned pensions.

The regulator is urging people to be particularly wary if they are offered a so-called ‘free pension review’, are encouraged to move their pension for superior returns or to release cash from their plan. Potential victims may be targeted by phone, text message, email or via online adverts.

According to the FCA, many of the companies making these approaches are falsely claiming to be authorised by the regulator. Others incorrectly claim that because they are not offering ‘advice’ they do not need to be regulated by the watchdog.


In some cases, callers are claiming to be from Pension Wise, the government’s free pension guidance service, however this organisation does not make cold calls.

What should you do if you are targeted?

The FCA says that if you see an online advert or receive a suspicious email or text message the best option is simply to ignore it. If you are targeted by phone, hang up before engaging in any conversation.

What is at risk?

Many ‘free reviews’ will be attempts to get you to move your pension into a high-risk investment such as forestry, overseas property, storage units, care homes and bio-fuels. In order to tempt you there may be an offer of a cash lump sum or guaranteed returns.

Some investments will be pure attempts to rob you of your cash, others could be badly run, high-risk schemes that are not regulated by the FCA. This means you could lose some or all of your pension savings. If you release any cash from your pension, you could be hit by an unexpected and sizeable tax charge.


Why have fraudsters turned to pensions?

Andrew Tully, pensions technical director at Retirement Advantage, says that pensions have become increasingly attractive to scammers following the relaxation of pension rules. “It is undoubtedly on the rise since the introduction of the pension freedoms as it has become so much easier for people to get their hands on their money.”

Spotting a scam

However, unfortunately spotting a scam can easier said than done. “It really isn’t easy,” warns Mr Tully, “especially for older more vulnerable consumers.”
He adds: “Genuine advisers will offer free pension reviews or offer a free initial meeting.

“If you have been cold-called or contacted out of the blue, I would definitely be on my guard. Also, if they try to make you act quickly - a genuine adviser would want to give you time to consider your options.”

It is for this reason that Retirement Advantage is one of a growing number of organisations to give its support to a new petition seeking a ban on pension cold-calling.

At the time of writing, the petition had more than 7,000 signatures. If it reaches 10,000 the government will be forced to make an official response. At 100,000 it will have to hold a parliamentary debate.

If you are suspicious, you can also check whether a firm or individual is authorised by the FCA using its online register.

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