We use cookies to allow us and selected partners to improve your experience and our advertising. By continuing to browse you consent to our use of cookies. You can understand more and change your cookies preferences here.

Consumer Rights.

How to spot a pension scam

Never be rushed into making a decision. A lifetime’s savings can be lost in a moment. Our guide tells you how to avoid potential pension scams.
Which?Editorial team

Key Information

Ban on pension cold calling

Pension scams are a worrying problem and are costing savers millions of pounds. The government has announced a ban on pensions cold calling.

No legitimate pension or investment firm will ever cold call you about releasing cash from your pension, accessing it before you are 55 or extra tax savings, so alarm bells should ring if they do.

1 What’s a pension scam?

Since April 2015, the government’s pension reforms have given the over-55s the freedom to cash in their company and personal pensions.

Thousands of people now have more freedom over what to do with their pension pot. With millions of pounds now accessible that previously weren’t, scammers will circle like vultures and try to take advantage.

Pension scams are not a new thing. But they are likely to become more prevalent now people have more options available to them when it comes to investing or spending their money. 

Pension scams may be referred to by shady salesmen as:

  • pension loans
  • early pension release
  • pension selling
  • cashing in your pension
  • pension liberation

These are all different names for essentially the same thing – an agreement to transfer your pension savings to something that allows you access to your funds before the age of 55. 

Or, to allow you to access your pension pot as cash in larger quantities than is currently allowed under the law.

Scammers may attempt to sell you a too-good-to-be-true, ‘one-off’ investment, usually via an unsolicited phone call, text message or email, or even in person after calling at your door.

They may even attempt to entice you with upfront cash payments.

Scammers will often offer a ‘free pension review’ to give the impression that they are honest and independent advisers. 

You should only get a review from an Independent Financial Adviser registered with the Financial Conduct Authority (FCA).

Some scammers also advise you to ‘liberate’ your pension into one of these too-good-to-be-true schemes before you turn 55, which isn’t permitted under the new rules

2 How do I avoid pension scams?

You should always be suspicious if anyone calls you out of the blue to offer you a money-making deal.

If someone calls you, always ask to call them back. Reputable companies will always be happy to let you do this, whereas scammers tend to be more reluctant to give contact details.

Any review of your pension should be conducted by a regulated financial adviser.

Be aware that some firms might pretend to be offering free guidance, and some might even pretend to represent Pension Wise, which the government has made an offence in recent legislation.

Key Information

Spot a pensions scam

  • phrases used include ‘one-off investment opportunity’, ‘free pension review’, ‘legal loopholes’, ‘cash bonus’, ‘government endorsement’
  • you’re approached out of the blue over the phone, via text messages or in person at the door
  • you’re asked to transfer your money overseas
  • you’re promised access to your pension before age 55
  • no copies of any documentation is provided
  • you’re encouraged to speed up transfer of your money to the new scheme.

3 Research the company

Check the FCA’s register of regulated financial services providers. This will tell you whether the company is registered as well as listing any companies being investigated.

Any company claiming to be government-endorsed is not telling the truth. 

Don’t proceed unless you are absolutely certain your money will be safe. Once you transfer, it’s too late.

The government has launched an official pension guidance service called Pension Wise. You can book a free appointment to talk about your pension options. The guidance is being delivered by Citizens Advice and the Pensions Advisory Service.  

4 Further help

  • before you sign anything, call the Pensions Advisory Service on 0300 123 1047 for information and guidance
  • if you have already accepted an offer, raise the alarm by calling Action Fraud on 0300 123 2040
  • find out more about your money options in our pensions and retirement section.

5 Better pensions campaign

Pension reforms mean people have more options than ever before on how to use their pension pot. 

The Which? ‘Better pensions’ campaign is calling for action to make sure everyone can benefit from the freedom and choices available to them. 

We want a government-backed scheme to be established to give everyone access to a good value, low-cost pension product, no matter who their pension provider.  

Sign up to join our Better pensions campaign.