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Protecting your pension: Don’t let scammers steal your life savings

Wise
18.10.23 (updated more than 1 year ago)
Read time 2 minutes

Howard was looking for ways to make his retirement as comfortable as possible. He’d been paying into his pension consistently and generously for almost 45 years, and wanted to make sure he and his partner wouldn’t have to worry when he stopped working.

So when he spotted an advert on Facebook suggesting that using his pension to buy property abroad would earn a much higher return, Howard was curious. He filled out his details and waited for the call… unfortunately for Howard, this was the start of a vicious pension scam.

Wise is proud to be part of the Take 5 scheme. For more information about how to avoid scams, go to the Take 5 website here: https://www.takefive-stopfraud.org.uk/

With pension freedoms more liberal in the UK, pension scams are more popular than ever. Most people can now access their pension from as early as 55, and in some cases earlier. So opportunistic scammers are preying on people with access to large sums of cash, by offering great deals to make their pension go even further.

Popular scams include buying property abroad, investing in energy companies (wind, solar or oil), supporting the building of storage units and even car parks. So what do you need to be aware of when it comes to pension scams?

Watch for words like: 'liberation', 'loan', 'loophole', 'savings advance', 'one-off investment', and 'cashback'

When it comes to pensions, certain words should immediately set off red flags. Scammers often position their knowledge as helping people avoid strict pensions regulation, so finding ‘loopholes’ to make a more progressive investment could sound tempting. Similarly, ‘cashback’ suggests that any sort of investment is guaranteed, which we all know simply isn’t the case.

By ‘liberating’ your money, you may have better access to it, but so does the scammer, and often this ‘liberation’ comes at a cost. For example, you could receive a high tax bill from HMRC if you withdraw your pension savings before the age of 55.

Something a scammer might neglect to mention when ‘liberating’ your funds for a “one-off investment”…

Use a registered Financial Advisor when doing anything with your pension
Unfortunately for many people , pensions can be complicated. It’s not something the majority of us deal with every day, and it's one of many reasons scammers can be so successful, guiding people through a process that they might not understand.

But for all those reasons you should be even more cautious, and speak to a registered Financial Advisor for any serious pension decisions.

If you want help finding a Financial Advisor, MoneyHelper (a government-approved online advice service) can be a great resource to start your search. You should also check the FS register to make sure your advisor is regulated by the FCA.

If it’s too good to be true, it probably is...

Unfortunately with any type of scam, and particularly investment scams, if the return seems too good to be true, it often is.

‘Guaranteed returns’, high returns of 8% or higher, or easy access to lump sums of your pension with little tax implications are all unrealistic. While it’s very tempting to believe you might have found the secret to earning much more from your pension, it’s often not the case. Scammers will let you feel like you’re ‘in’ on a financial secret, when the reality is you’re losing your hard earned money.

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REMEMBER

Staying informed about the tactics scammers use and following these guidelines can significantly reduce the risk of falling victim to cost of living scams. Being vigilant and proactive is the key to protecting ourselves and our finances. Remember to always Take 5: stop, challenge, and protect yourself to keep yourself safe from potential scams. If you’re a Wise customer and think you’ve been scammed, you can report this and get in touch here.

*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

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