Pension Scams

Pension scams are on the rise so if you're thinking of transferring your pension benefits to another pension provider, make sure you protect yourself from scammers.

The risks of transferring your benefits to an illegal company may be very damaging to your future financial security. If you do fall victim of a scam, it is unlikely your money will be recoverable. You may also face a tax bill from HM Revenue and Customs (HMRC).

Shropshire County Pension Fund has signed up to meet the standards of the Pensions Regulator’s pledge to combat pension scams. We have self-certified as meeting the requirements of the Pensions Regulator which is an industry standard pledge asking trustees, providers and administrators of pension schemes to do what they can to protect scheme members.

You can also get further information and advice from MoneyHelper and the Financial Conduct Authority (FCA).

If you're thinking about transferring your benefits out of the LGPS and seeking financial advice, we recommend you visit the Financial Conduct Authority's website. A video is available explaining defined benefit pension scheme transfers, and the service you should expect from your financial adviser. In some circumstances, you will be required to obtain financial advice before a transfer of your LGPS benefits can take place.

If you're worried that you may have fallen victim to a scam, contact Action Fraud.

How we protect you from scams

The Pensions Regulator asks trustees, providers and administrators of pension schemes to pledge to do what they can to protect scheme members and follow the principles of the Pension Scams Industry Group's (PSIG) Code of Good Practice.

Shropshire County Pension Fund has signed up to the Pensions Regulator’s pledge to combat pension scams.

As part of the pledge we must:

regularly warn members about pensions scams
encourage members asking for cash drawdown to get impartial advice from MoneyHelper
get to know the warning signs of a scam and best practise for transfers
take appropriate due diligence measures by carrying out checks on pension transfers and documenting pension transfer procedures
clearly warn members who insist on high-risk transfers being paid
report concerns about a scam to the authorities and communicate this to the scheme member

These are all things that the fund does as part of our normal processes, but we're pleased to confirm this with the Pensions Regulator.

How you can protect yourself from scams

The Pensions Regulator suggests four simple steps that you can take to protect yourself from pension scams.

1. Reject unexpected offers

If you're contacted out of the blue about your pension, chances are it's high risk or a scam. Be wary of free pension review offers. A free offer out of the blue from a company you've not dealt with before is probably a scam. Fortunately, research (from FCA Financial Lives) shows that 95% of unexpected pension offers are rejected.

2. Check who you're dealing with

Check the Financial Services Register to make sure that anyone offering you advice or other financial services is FCA-authorised.

If you don't use an FCA-authorised firm, you also won't have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme. So you're unlikely to get your money back if things go wrong. If the firm is on the FCA Register, you should call the Consumer Helpline on 0800 111 6768 to check the firm is permitted to give pension advice.

Beware of fraudsters pretending to be from a firm authorised by the FCA, as it could be what we call a 'clone firm'. Use the contact details provided on the FCA Register, not the details they give you.

3. Don't be rushed or pressured

Take your time to make all the checks you need - even if this means turning down an 'amazing deal'. Be wary of promised returns that sound too good to be true and don't be rushed or pressured into making a decision.

4. Get impartial information and advice

MoneyHelper - provides free independent and impartial information and guidance.

Pension Wise - If you're over 50 and have a defined contribution (DC) pension. Pension Wise offers pre-booked appointments to talk through your retirement options.

Financial advisors - It's important you make the best decision for your own personal circumstances, so you should seriously consider using the services of a financial advisor. If you do opt for an adviser, be sure to use one that is regulated by the FCA and never take investment advice from the company that contacted you or an adviser they suggest, as this may be part of the scam.

Pension liberation

If you're paying money into a registered pension scheme your contributions receive tax relief. This means you don’t pay tax on the money you put into your pension account.

The pension tax rules state you can’t take your benefits before age 55, unless you're suffering from ill-health. If you take your benefits before age 55, this is considered an unauthorised payment by HMRC, and you would have to pay back the tax relief. This is known as pension liberation.

Pension liberation should not be confused with ‘freedom and choice’. This allows members of defined contribution pension schemes, who are 55 or over, to access their benefits more flexibly. This includes the option to take all your benefits as a cash lump sum.

Shropshire County Pension Fund

Important information:

'My Pension Online' has recently had an upgrade.

Pension Scams

How we protect you from scams

How you can protect yourself from scams

Pension liberation

Related Links

Related Documents