Pension scams are extremely dangerous as they can come in lots of guises, they are savvy and creative, and would do anything to part pension savers with their money. Here’s an example of one scenario to help illustrate what a real-life case may look like – from the victim’s thought process, to his touchpoints with the scammer – to him losing all of his retirement income.

Michael's story

Michael has retired recently and still has the best part of his pension lump sum sitting in his bank account. Michael has had a successful career and has held senior roles for the past 25 years. He’s also been saving extra towards his pension by paying additional voluntary contributions. Michael has got quite a lot of money in his bank account at present.

One morning, while having a coffee and scrolling on his tablet, Michael receives an email from an investment company prompting him to invest in their offshore renewable energy bonds. The sender – the company’s Chief Financial Officer – is promising Michael big returns on his investment, as well as some extra perks for being an investor such free exotic getaways for him and his wife Anne.

Michael: I think I just received an offer I can’t say ‘no’ to. You know all that money I have sitting in the bank, imagine doubling or even tripling it by simply investing it.

Anne: How do you know the offer is genuine? I think you should speak to someone before you decide to invest it all.

Michael: Of course it’s genuine. I can recognise a scam from miles away and this is definitely a perfectly legitimate email. It comes from a real person whom you can contact back, it has a disclaimer on the bottom that mentions the FCA and they’ve even made the effort to find out more information about me such as my name, age and that I’m now a pensioner.

Anne: Okay then, it’s your call.

Michael decides to call the sender of the email and has a long chat with them about their offer. They sound very professional and trustworthy, they use all the right financial jargon, and they give lots of advice and reassurance that Michael will get a huge payback.

Eventually, he transfers all of his hard-earned retirement savings, thinking he’s investing it for high returns. Instead, Michael never hears back from the sender nor does he receive a penny, never mind the high returns on his ‘investment’ he was expecting.

The financial impacts on him and his family are tremendous. What is worse is that Michael develops emotional distress and anxiety. His health and quality of life are hugely impacted and Michael’s plans for a happy and relaxed retirement are truly ruined.

Older people are at a high risk

Scenarios like this are happening every single day in the UK. Pensioners and older people are at a high risk of falling victim to sophisticated scams. They get savvier and savvier in their use of different means to achieve their mission to part retirees with their pension. Just because you’ve started taking your pension doesn’t mean you’re protected from the threat.

No matter how good it sounds, you must do your own research and strongly consider speaking to a financial adviser before you make any important decisions about your money. Generally, if it sounds too good to be true, it probably is, so you must be on your guard.   

How to protect yourself

• Always reject unexpected offers
• Never make rushed decisions about your money
• Be very wary if you’re offered a free pension review
• Do your own research of anyone offering financial advice – check the Financial Conduct Authority (FCA) register at fca.org.uk or call 0800 111 6768 to make sure that they are FCA-authorised.
  

Suspicious? Visit fca.org.uk/scamsmart, or call The Money and Pensions Service (MaPS) on 0800 138 7777 for free pensions guidance and information. 

If you think you've been scammed call Action Fraud on 0300 123 2040 to report it.

You can also contact MoneyHelper on 0800 015 4402 and ask to speak to pensions specialist about how you might be able to rebuild your pension, to review your State Pension and to trace any other pensions you may have bit have lost touch with.