New research reveals 5 million savers at risk from pension scams

Tom Selby
7 August 2019

The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) has revealed 5 million savers remain at risk of falling victim to retirement scammers despite a Government clampdown and efforts to raise awareness.

The full press release is available immediately below.

Key points

•       Almost half (42%) of 2,012 adults aged 45-65 with a pension surveyed said they would take one or more actions that could expose them to common scam tactics
•       Nearly a quarter (23%) said they would be likely to pursue offers of high returns in exotic investments such as overseas property, biofuels and storage units
•       Worryingly, 23% also said they’d speak with a cold-caller about their pension plans

Tom Selby, senior analyst at AJ Bell, comments: “While huge strides have been made in tackling pension and investment fraud recently, particularly when it comes to raising awareness among consumers, this research shows a worryingly large number of people are at risk of falling victim to common tactics used by fraudsters.

“Government, regulators and the wider pensions industry must not rest on their laurels when it comes to combating the scourge of scams. The ban on cold-calling introduced in January this year was a welcome step in the right direction but it was never going to eliminate retirement fraud altogether.

“Scammers’ tactics are evolving all the time and increasingly we see complex schemes promoted online through social media. This virtual Wild West is a natural home for fraudsters, with Governments around the world struggling to create meaningful protections for consumers.

“Education about the dangers of scams and actions people can take to protect themselves is therefore absolutely critical.”

Simple tips to avoid being scammed
•       Watch out for investment ‘opportunities’ that appear out of the blue and sound too good to be true. Schemes offering high guaranteed returns are often at the heart of pension and investment scams. 
•       If you are cold-called about your pension, hang up immediately.
•       Be extremely wary of anyone offering ‘free advice’ or a ‘free pension review’. Advice is never free.
•       If you are speaking to an adviser about your pension, make sure they are regulated and check their credentials out via the FCA register.
•       Don’t be rushed or pressured into making a decision about your pension – such tactics should set off a big red warning light in your mind and are often indicative of a scam.

•    New figures show cold calls, exotic investments and early access to cash among most persuasive tactics used by fraudsters
•    Those who consider themselves financially savvy are just as likely to be persuaded
•    FCA and TPR join forces to warn pension savers as part of latest ScamSmart campaign

The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) are joining forces again this summer to warn the public about fraudsters targeting people’s retirement savings. This warning comes as new research suggests that 42%1 of pension savers, which would equate over 5 million2 people across the UK, could be at risk of falling for at least one of six common tactics used by pension scammers. 
The likelihood of being drawn into one or more scams increased to 60% among those who said they were actively looking for ways to boost their retirement income.
Pension cold calls, free pension reviews, claims of guaranteed high returns, exotic investments, time-limited offers and early access to cash before the age of 55 could all tempt savers into risking their retirement income. 
The research also found that those who consider themselves smart or financially savvy are just as likely to be persuaded by these tactics as anyone else. 
Pension savers were tempted by offers of high returns in investments such as overseas property, renewable energy bonds, forestry, storage units or biofuels. However, exotic or unusual investments are high-risk and unlikely to be suitable for pension savings. Nearly a quarter (23%) of the 45-65-year-olds questioned said they would be likely to pursue these exotic opportunities if offered them. 
Helping savers to access their pensions early also proved to be a persuasive scam tactic. One in six (17%) 45-54-year-old pension savers said they would be interested in an offer from a company that claimed it could help them get early access to their pension. However, accessing your pension before 55 is likely to result in a large tax bill for the saver. 
23% of all those surveyed said they’d talk with a cold caller that wanted to discuss their pension plans, despite the government’s ban on pension cold-calls this January. Nearly a quarter said they would ask for website details, request further information or find out what they’re offering, even if the call came out of the blue. 
Victims of pension fraud reported in 2018 that they had lost an average of £82,0003. Pension fraud can be devastating, as victims can lose their life savings and be left facing retirement with limited income. As a result, the regulators are joining forces to urge pension savers to be ScamSmart and to check who they are dealing with before making any decision on their pension. Last year’s ScamSmart campaign resulted in more than 3705 people being warned about unauthorised firms. This year’s campaign is currently running on TV, radio and online. 
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.”
“We know we can beat these callous crooks, because getting the message out there does work. Last year’s pension scams awareness campaign prevented hundreds of people from losing as much as £34 million, and I’m backing this year’s effort to be bigger and better as we build a generation of savvy savers.”
Mark Steward, Executive Director of Enforcement and Market Oversight, FCA, said: 
“It doesn’t matter the size of your pension pot – scammers are after your savings. Get to know the warning signs, and before making any decision about your pension, be ScamSmart and check you are dealing with an FCA authorised firm.”  

Nicola Parish, Executive Director of Frontline Regulation, TPR, said:
"Scammers don’t care who they prey on or how many lives they wreck. If you ignore the warning signs you put yourself at risk of losing your savings.
“Victims are left devastated by what has happened to them. Make sure neither you nor any of your loved ones have to go through that ordeal.”
Honey Langcaster-James, psychologist, added: 
“Most people are confident in their ability to avoid being scammed. We tend to assume that it would never happen to us because we think we’d notice something if it wasn’t right. But even the smartest and savviest among us can become victims of crimes and we do often have a ‘blind spot’. Sophisticated scammers take advantage of this and use powerful psychological techniques to build trust and rapport and ultimately to influence our behaviour.”
The regulators recommend four simple steps to protect yourself from pension scams:
1.    Reject unexpected pension offers whether made online, on social media or over the phone
2.    Check who you’re dealing with before changing your pension arrangements – check the FCA Register or call the FCA contact centre on 0800 111 6768 to see if the firm you are dealing with is authorised by the FCA
3.    Don’t be rushed or pressured into making any decision about your pension
4.    Consider getting impartial information and advice
Pension savers can test how ScamSmart they are by taking a new quiz on the ScamSmart site. Visit to find out more.

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