Pension Scams- what you can do to avoid them (Part 1)

Pension Scams

Pension scams have been rife since the implementation of A Day.

They are so sophisticated now that their marketing and paperwork can appear legitimate to all those other than a trained professional.

There is one action, written in the conclusion of the follow up article, that could prevent 90% of fraudulent pension transfers and pension scams involving final salary pensions.

Pension schemes in the UK no longer go through the previous and now abolished HMRC approval system . As a result, while many people have benefitted from the changes, some have fallen victim to pension scams.

As we are a company focused on the provision of advice to expatriates, who may be members of UK pension schemes, we thought we would summarise a few steps that will help you avoid a pension scammer or pension scams in general.

Newspaper and magazine articles now regularly comment on pension scams, within the UK and outside of the UK, the reality is pension scams have become a multi-million pound industry. A pension scammer may well make a fortune, but once a pension is lost there is often little one can do to get recompense.

Most financial planners, fund managers and trustees want to do the best for their clients and these are the people you want to be speaking to. People do need advice about their pensions, particularly when they have pensions from previous employers or private pensions and they move to other countries.

So, if we accept that people need to engage with a good financial planning company, how does one sort the wheat from the chaff?

Pension Scams- some basic pointers

Were you cold-called, contacted on LinkedIn , sent a text or emailed without permission? The first alarm, how did the firm get your contact details?  Ask them, and be on your guard to the answer, as many questions as possible as these firms sound plausible. They will have rehearsed a response and even can encourage you to seek confirmation on a regulatory website such as the FCA to prove they are genuine.

RECOMMENDATION: On the regulatory website there will be contact details of the firm. Say to the caller you will put the phone down and ring them back on the regulatory contact numbers published. If they try to dissuade you, or put the phone down on you, then you should run a mile. The firm’s name has been (technical term) cloned.

Personally, I would recommend you hang up, or do not respond to any unrequested communication about your pension. Cold-calling will soon be banned in the UK in an attempt to reduce pension scams, but outside the UK it will continue.

Having started to engage with an adviser that you have found on the internet, or that has been referred to you, do your due diligence on the adviser AND the firm actually giving the advice. You may find the adviser is “wearing two hats” – and that they pretend to be representing one company whereas the actual advice or “sign-off” is from another company entirely, that is (you guessed it) not authorised in the UK to be giving the advice.

(Much of this blog is focussed upon final salary pensions as they are the most lucrative pensions to target as they are normally larger in value.)

The Firm

Regulation- many victims of pension scams later discover that the “fully-regulated” adviser was not working for a regulated firm. The impact of an adviser firm not being properly regulated is that complaining to a regulator later on will often bear no fruit in the majority of countries.

Ask for evidence that the firm is licenced in the jurisdiction where the advice is being given and then independently check it with the regulator. Many regulators have lists of all registered advisers on their websites. If the firm is giving you any advice at all about investments (and pensions ), they should have an investment licence (often called MiFID in the EU).

(With UK pensions, and the requirement to take advice , it may be that the advice cannot be regulated in your jurisdiction. Make sure the adviser covers this issue with you)

Transparency  – All professional firms, be they accountants, lawyers, architects etc., will provide potential clients with a fee-agreement before engagement. An IFA firm should do the same and you should agree what fees are payable to the IFA firm and to the trustees and fund managers. Get it all in writing before you do anything.

Never trust a report that says the total charges are “all together 1% or 1.5%”. This is a phrase often used by pension scammers, the real fees being several times that amount. What you really must have is a breakdown of all charges relating to all the different parts of the future pension (Adviser fees, platform fees, fund fees and dealing costs).

If you are told to invest in something with a “guarantee” or esoteric investments (non-mainstream and not held on a recognised trading market) be aware that  pension scammers  tend to recommend them, and these are the terms of description they use. “Boutique” is another term to be wary of.

RECOMMENDATION: Do some basic background checks with regulatory bodies, which will take 10 minutes to do (time well spent when you think you are taking advice for many years of a long retirement). Look at the LinkedIn profiles of advisers and cross-check with their claimed experience in the industry. If there is a UK regulated firm in there, phone them by following the contact details that are held on the FCA register (rather than trusting numbers you have been given).

Also, be wary of websites that list “Partner” firms of investment companies, insurance companies and pension companies. We would question why an independent adviser would have them on the website and some use household names to give supposed credibility to their own company.

The Adviser

Don’t accept the statement ‘fully-qualified’ or ‘qualified to UK standards’ without evidence. Fully qualified means NOTHING, and qualified advisers rarely use this term – why would we?

If you get on a plane the pilot does not start by telling you he/she is “fully-qualified” to fly the plane. You would assume he/she is qualified, wouldn’t you be a bit suspicious if the pilot said that? You want to hear about where the plane is going, how safe it is going to be to get there, and what service level you will have on board.

Do we ever tell clients we are “fully-qualified”? No, we don’t need to as we provide a due diligence pack when requested with links to all the regulation that our advice falls under  and confirmation of qualifications that can be verified.

However, a pension scammer could be clever and register with a professional institute as a “student” or even “social member” and then appear as though somehow qualified and regulated. For example, it is not uncommon for directors or salesmen overseas to state that they are a member of the Chartered Insurance Institute. The public will assume this means “qualified”, it does not.

Check on the register

CII Ord/CII Student – not qualified

CII Award/FAIQ- basic NVQ 2 level qualification, useful for beginners and new entrants

CertPFS- Qualified member but insufficient to qualify to give advice in the UK

DipPFS- UK standard

APFS/FPFS – Above UK current requirements

If the adviser claims expertise in pensions, personally rather than the company, ask to see the G60 or AF3 Pensions Certificate. If he/she does not have it, ask for evidence that the individual “signing off” or “giving the “UK regulatory advice” holds one of these certificates and then go and check it with the CII (contact above). It takes 5 minutes to do this.

Find An Adviser- The CII also have a find an adviser link that covers the UK and outside of the UK

(The CISI  also has a register but not for the public, you need to get the adviser’s permission to check on the qualifications)

For many expat advisers, high level qualifications are not always necessary for straightforward pension and investment advice. Experience can count for a lot in both the local environment and also the country where the pension is going to be held (Malta, etc.).

Pension scammers dwell on the many thousands of happy customers they have with “references” on websites, and even allow you to contact “past clients” just like real advisers. The problem is that scamming is a multi-million pound business, and pensions scammers just make this information up, and even pay people to provide references.

RECOMMENDATION: Do some digging on Google to see what you can find about the firm and the adviser, and don’t trust anyone’s websites (I know, you are reading ours now, but we have to put up with the fact that all the above comments  apply to us as well – hence why we have put together due diligence packs with links to all the regulated authorities to check us out. We have also had over 200 judges in the last 2 years alone award us with over 10 awards from 6 different publications, both inside and outside of the UK).

The fact is those involved in Pension Scams tend to hide their past, distort it or just plain lie!


Check, check and check again. It takes a working lifetime to build up a pension and a few days to lose the whole lot.

We will follow up this blog with further suggestions to avoid pension scams.

The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not except any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.

This article was published on 5th December 2017


Chris Lean

Chris is a Chartered Financial Planner who writes blogs and articles to simplify and explain some of the financial issues that affect UK expats. Subjects include; hot topics, regulation and the ever-changing world of finance.

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