Your pension might be one of your most valuable assets. And for many people, it offers financial security throughout retirement and for the rest of their lives.
But, like anything valuable, your pension can become the target for illegal activities, scams or unsuitable and high-risk investments.
Pension scams can take many forms and usually look like a legitimate investment opportunity. But pension scammers are clever and know all the tricks to get you to hand over your savings.
They target anyone, pressuring you into transferring your pension savings, often into a single investment.
If someone contacts you unexpectedly and says they can help you access your pot before the age of 55, it’s likely to be a pension scam.
You could lose all your money and face a tax charge of up to 55% of the amount taken out or transferred, plus further charges from your provider.
The investments might be overseas, where you have no consumer protection. And they might promise you a high guaranteed rate of return (typically 7-8%, or higher).
These are often false investments in luxury products, property, hotel developments, environmental solutions or storage and parking, which often don’t exist or are very high-risk with low returns.
Remember, when you’ve transferred your pension into a scam, it’s often too late. You might also face a tax charge from HMRC.
The government has now banned cold calling about pensions. It’s important to ignore anybody who approaches you out of the blue about your pension entitlements or pension matters. It’s most likely to be a scam.