You have no protection from pension scams

Print Friendly

Many people do not realise that investments made into pension scams are not protected.

Whilst the FSCS protects £85,000 worth of savings and accounts held by individuals and small businesses in banks, building societies and credit unions that are authorised by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), any investments you make with other companies are not protected.

We want to share a real-life story with you to make you aware of some of the pitfalls.

Bill’s story

Bill is 53 and due to retire in 12 years. He recently re-mortgaged his house to pay for his daughter’s university fees. He has been in a pension scheme for more than 30 years and his pension pot is now valued at £114,000. He decides to find out about accessing his pension early and searches the internet for ‘early pension release’.

Sure enough, he finds a website offering pension release and he submits his contact details and receives a call the same day. He is told he can have 5% of his pension in cash immediately and the rest will be invested in UK storage facilities. This investment will generate a guaranteed 8% return. The company sends Bill a courier and he signs the paperwork. This is the point of no return, he is now committed. A week later he receives £5,700 (5% of his pension).

After a few weeks Bill calls the company to find out about his investment, but he can’t get through because the number is engaged. Feeling worried, he looks up the company address and goes to the offices only to find that the company at the address says they are not responsible and he is given a different telephone number to call. Surprise, surprise, that number is also always engaged.

Finally, Bill contacts Action Fraud and is told that it is likely that he has lost his entire pension. Then, to top it all he receives a letter from HM Revenue & Customs (HMRC) which informs him that he owes £62,700 which is an unauthorised payment tax charge.

Bill has lost £171,000.

So, what did Bill do wrong? He was too focused on getting his cash as quickly as possible. He didn’t check out the company to see if it was on the FCA Register. He was lulled into a false sense of security with the small cash payment and was attracted by the high rate of return offered for the rest of his pension money. He fell victim to high-pressure sales techniques and signed papers delivered by courier immediately without taking time to collect his thoughts. He broke rules by accessing his pension before he reached the age of 55 which meant that HMRC levied a large tax charge despite the fact he had lost his pension.

What Bill should have done

First and foremost, he should have taken his time and checked out the company. It’s easy, go to the FCA Register to see if the firm you are considering is listed and whether your funds are protected or contact The Pensions Advisory Service on 0300 123 1047.

Secondly, he should have done more research and possibly contacted a registered, professional, independent advisor or talked to his bank or building society.

Why would you spend 30 years saving and then make an investment decision about your pension in a few days?

What to do if you have been scammed

If you do become a victim please report it to Action Fraud  and if you have signed papers and realise it is an investment scam report it straight away to Action Fraud by calling 0300 123 2040 or online.

The Financial Conduct Authority also has a Consumer Helpline on 0800 111 6768.


The contents of this article are for reference purposes only and do not constitute financial or legal advice. Independent financial or legal advice should be sought in relation to any specific matter. Articles are published by us without any knowledge or notice of the circumstances in which you or anyone else may use or rely on articles or any copy of the information, guidance or documents obtained from articles. We operate and publish articles without undertaking or accepting any duty of care or responsibility for articles or their contents, services or facilities. You undertake to rely on them entirely at your own risk, and without recourse to us. No assurance of the quality of articles is given or undertaken (whether as to accuracy, completeness, fitness for any purpose, conformance to any description or sample, or otherwise), or as to the timeliness of the publication.

The following two tabs change content below.

Denise Pritchard

I am marketing director and am delighted to be a member of the team developing and growing this exciting new online community. At Silversurfers, my focus will be to implement marketing solutions which enhance our brand and build relationships with our community. To that end, I believe in creating flexible and integrated communications solutions to support and meet our business objectives. In the last 10 years I have rolled out this approach successfully with a diverse range of companies including ABN AMRO, Ricoh, AMD, Lombard Technology Services, Forensic Risk Alliance, ITV, BT, Neilson Active Holidays and Forrester Research. I have a Law degree from UCL (London) and am a Governor at Brighton and Hove Highschool. In my spare time I love to travel and have just returned from touring Europe in an American Motorhome for 15 months. This gave me the opportunity to sample regional food and wine (another passion) and to get a real insight into the diversity of European culture. I am also an animal lover and my husband and I rescued a few dogs on our travels and found them loving homes in the UK.

Not a member?

Join the silversurfers community today! It's free, easy to do, and is packed full of features and amazing offers!

Join the community!
Click here if you have forgotten your password

Community Terms & Conditions

Content standards

These content standards apply to any and all material which you contribute to our site (contributions), and to any interactive services associated with it.

You must comply with the spirit of the following standards as well as the letter. The standards apply to each part of any contribution as well as to its whole.

Contributions must:

be accurate (where they state facts); be genuinely held (where they state opinions); and comply with applicable law in the UK and in any country from which they are posted.

Contributions must not:

contain any material which is defamatory of any person; or contain any material which is obscene, offensive, hateful or inflammatory; or promote sexually explicit material; or promote violence; promote discrimination based on race, sex, religion, nationality, disability, sexual orientation or age; or infringe any copyright, database right or trade mark of any other person; or be likely to deceive any person; or be made in breach of any legal duty owed to a third party, such as a contractual duty or a duty of confidence; or promote any illegal activity; or be threatening, abuse or invade another’s privacy, or cause annoyance, inconvenience or needless anxiety; or be likely to harass, upset, embarrass, alarm or annoy any other person; or be used to impersonate any person, or to misrepresent your identity or affiliation with any person; or give the impression that they emanate from us, if this is not the case; or advocate, promote or assist any unlawful act such as (by way of example only) copyright infringement or computer misuse.

Nurturing a safe environment

Our Silversurfers community is designed to foster friendships, based on trust, honesty, integrity and loyalty and is underpinned by these values.

We don't tolerate swearing, and reserve the right to remove any posts which we feel may offend others... let's keep it friendly!

More Pensions

How to make the most from your pension freedom Senior couple tourists
George Osborne’s pension freedoms have unshackled pensioners from the need to buy an annuity...
Do you know how much your savings and investments are worth? RetireEasy_81827446
UK's first 'retirement planning dashboard' lets you know precisely what your savings and...
The 2017 Pensions Wish List Pension_retirementplan_resized
As an independent financial advisor I would hope I understand the differing levels of wealth...
6 key steps you should take before considering retirement Gold nest egg concept for retirement savings and financial planning
I’ve seen a lot of clients looking to retire over the last few years and I don’t think I’ve...
Why do I need retirement advice? Having a retirement plan A golden piggy bank card and calculator on wood background with text Retirement Plan
For as long as I’ve been a financial advisor I always hear comments on why would you pay for...
What do our Silversurfers know about Pensions? Worried senior woman, an elderly pensioner counting utility bills at her home, concept of financial security in old age
Some surprising results - Barometer Survey shows that many of our Silversurfers community are...
The Post Brexit World – “the pensions time bomb” Breaking The Bank
On the 24 th June the UK and possibly the world woke to a new dawn in global politics and global...
An extra £25 on your State Pension? Okay then! Retirement Senior Citizen Insurance Pension Management Concept
This week the Government opened the doors on its new State Pension top up scheme, meaning...
October 2015 - State Pension top up dwp4
There’s still no such thing as a free lunch, but there are some good investment options out...
February 2015 - Get your State Pension statement dwp2
It’s hard to know how to plan for your retirement when you don’t know how much money you’ll...
January 2015 - Automatic enrolment dwp1
Back in 2012, only 1 in 3 people were saving into a workplace pension, meaning that most wouldn’t...
April 2016 - State Pension changes dwp5
The State Pension is changing, and it is important to know what the changes mean for you. Have a...