Helping employees avoid pension scams

20 August 2018

This article was featured in the September 2018 issue of the magazine.

Steve Butler, chief executive, Punter Southall Aspire, reveals the extent of pension scams and provides advice 


Pension scamming has been on the rise since the government introduced pension freedoms in 2015. While the intent was to give people more options and flexibility, it has also made it easier for people to become targeted by fraudsters. 

Towards the end of 2017, government statistics suggested that £43m had been stolen by scammers since April 2014. However, the Pensions Administration Standards Association believes the true picture is much bigger; with its chair, Margaret Snowdon, saying the total was more likely to be £1bn. She arrived at this figure “by talking to insurers, administrators and trustees [who] have paid for transfers that they think are suspicious” (

A recent survey by Prudential found that about one in ten of over-55s say they have been targeted by scammers since pension freedoms were introduced. But about half of those who have been targeted say they haven’t reported their concerns because they don’t know to whom to turn (

Of course, being targeted and becoming a victim are different things – but these statistics show the wide scale of the problem.

There is a degree of caveat emptor involved here. People need to take individual responsibility over their money and that includes their pension. However, most good businesses believe they have a duty of care to their employees which includes ensuring they can manage financially when they are older.


...pressure-selling techniques, perhaps including warnings that it’s a time-limited offer


If a member of staff loses their pension due to fraud, their colleagues could become more sceptical about whether saving into a pension is a safe, responsible and rewarding thing to do. This would not be in the best interests of the business – and nor is the enormous financial stress it can put employees under.

Most employees who have been in final-salary schemes will be required to take professional advice before transferring their benefits, unless they are under £30K valuation. But employees who are in defined contribution schemes are more vulnerable to approaches, so it’s recommended that employers warn them about potential scams.

Pension scammers often make promises that are too good to be true. Phrases such as ‘guaranteed returns’ or ‘dead cert’ investments that are often overseas should ring alarm bells. 

Even if the scammers follow through on their promise and invest the money in these exotic-sounding schemes rather than just running off with the money, UK law will have no jurisdiction on them. This means that any employee who is persuaded to release a pension pot to one of these high-risk schemes will have no protection if things turn sour. This too-good-to-be-true approach is often accompanied by pressure-selling techniques, perhaps including warnings that it’s a time-limited offer. 

Employers should remind staff that pensions are long-term investments, so decisions should not be made under pressure. If someone is presented with ‘time-limited documents’ or told it’s a ‘once-in-a-lifetime offer’, they should be on their guard and steer clear.

Cold-calls are almost always an indicator of a scam. If an employee receives a call, an email or a text message promising a great deal they should hang up or delete it. 

Pension scammers will also often try to mask their scams under the cloak of respectability. They may tell outright lies, claiming to be authorised by the Financial Conduct Authority (FCA) or Pension Wise, for instance. If this sort of claim is made, it’s usually easy to check with a quick call to the relevant body.

Some advanced fraudsters will go a step further and attempt to give an air of respectability to their appearance and marketing literature – tricks designed to fool unwitting people. Also, if the only method of contact is a PO box address or a mobile telephone number, this is another red flag.

Check the FCA’s website for a list of registered financial advisers and make sure they are authorised to give pensions advice. The FCA also has a list of unauthorised firms and individuals, as well as a warning list about certain investments.

Using FCA-registered advisers should also give people protection against mis-selling. But employers can go one step further by encouraging staff to do the research themselves. Let them know you can help them with any queries and encourage them to raise concerns with you. 

If you can’t or don’t want to answer their questions directly, consider offering a pensions advisory hotline through a reputable company. They will answer queries on a company’s behalf, giving employees easy access to reliable information.

Finally, companies should consider giving employees access to a pensions adviser at key points in their career, particularly in the years before retirement. Ensuring employees have good understanding and confidence in their pension arrangements is the best deterrent for avoiding the scammers.