Anyone can be a victim of a pension scam.
What is a pension scam?
Essentially a pension scam is when a scammer tries to persuade a member of a pension scheme to invest their money into a high-risk investment fund potentially resulting in the loss of all of the members pension savings.
It can be common for members under the age of 55 to be contacted and attempted to be persuaded to transfer their pensions with the scammer stating a benefit that you would be able to access your pension early.
Different types of pension scams
- ‘Advice’ scams: Offer free advice with the aim of obtaining information or authority to transfer a pension
- ‘Review’ scams: Offer a free review into pension savings and investment returns
- Investment scams: Offer high returns on overseas pensions
- Liberation scams: Accessing your pension before the age of 55
- Perform a thorough due diligence check when a member asks for a transfer of their pension. We would recommend you maintain a standard due diligence checklist which is required for the transferring scheme
- Evaluate the transfer application carefully to ensure it is legitimately complied
- Send the member a copy of the scorpion warning
- Gain an understanding of the members current employment situation – What type of pension scheme are they transferring to and from
- Directly correspond with the money as to why they are transferring schemes and how they heard about the pension scheme
- Obtain a copy of the transferring schemes Trust Deed and Rules to ensure it meets the statutory requirements for a transfer
- Consider the risks which could arise from the transfer
- Recommend the member to obtain financial advice on the transfer from an impartial individual
- Ensure there are procedures in place to follow when a member transfers – Fair, consistent and good practice
- Have direct engagement with the transferring scheme prior to the finalisation of the transfer
- Send an acknowledgement email to the member which included warnings about the disadvantages and risks of transferring out