What is pension fraud?

It's when scammers target pension scheme members and try to persuade them to transfer some or all of their pension savings by making false promises and attractive sounding offers. The money is then transferred into non-existent schemes, stolen outright or invested into unusual high-risk investments.

MyCSP, the scheme administrator for the Civil Service Pension Scheme, has a proven track-record of combating fraudulent activity. It's part of our contractual responsibilities with the Scheme Manager, Cabinet Office.

It's important that our members are also aware of the risks of pension fraud and know how to identify it.

How to identify pension fraud

Pension scams can be difficult to spot - scammers often appear articulate and financially knowledgeable with websites, testimonials and materials that look credible and are hard to distinguish from genuine pension schemes.

Anyone can fall victim to a pension scam, so it's important to spot the warning signs:

  • Cold calls - cold calling about pensions is illegal. Since the cold-call ban was introduced in 2019, scammers’ tactics have evolved too. They can make contact through social media by using friends or family to reach clusters of people.
  • ‘Free pension review’ offers - professional advice on pensions is not free. A free offer out of the blue is likely to be a scam
  • Guarantees of better returns on savings
  • Help to release cash from a pension before age 55 - with no mention of the HMRC tax bill that can arise if you do this
  • Pressure sales tactics - such as ‘time limited offers’ or using couriers to send documents, who wait until they're signed
  • Unusual high-risk investments - which tend to be overseas, unregulated and with no consumer protections
  • Complicated investment structures - usually with several parties involved
  • Remote access - asking you to download software so they can access your device remotely
  • Long-term pension investments - which can often mean there is no sign of anything being wrong for several years, by which time it could be too late.

Many of these warning signs are considered red flags, which our administrators use as triggers to identify potential fraud. They are part of our robust Fraud Prevention strategy and processes.

If we suspect fraud is taking place, we will not action any request for transfers.

How to avoid pension fraud

Whether they're made online or over the phone. If it's a cold call, hang up immediately and report it to the Information Commissioner's Office. Cold-calling about pensions is illegal.

Don't be talked into something by someone you know - even if it's a friend or a family member - they could be getting scammed. Make sure to check everything yourself.

Check the Financial Services Register to ensure that anyone offering you advice is authorised by the Financial Conduct Authority (FCA), and that they're permitted to provide you with those services.

You can also check the FCA warning list to find out if there are any risks associated with a potential pension or investment opportunity. This will show you if the firm is known to be operating without FCA authorisation.

Take your time to make all the checks you need, even if it means turning down an 'amazing deal'. Be wary of promised returns that sound too good to be true, and don't be rushed or pressured into making a decision with 'time-limited' offers.

If you can, please seriously consider seeking financial advice before changing your pension arrangements. There are two ways you can do this:

    • MoneyHelper provides free independent and impartial information and guidance
    • A financial advisor can help you make the best decision for your personal circumstances. Just make sure they are regulated by the Financial Conduct Authority (never take advice from the company that contacted you - this may be part of the scam).

If you think you've been a victim of pension fraud

Report it to the FCA. You should also contact Action Fraud. Visit ScamSmart to find out more.

If you’ve already agreed to transfer your money and now suspect a scam, you should contact your pension provider straight away.

 

Published:
26 May 2022
Last updated:
27 May 2022