Pension Scam Recovery: What to Do If You Have Already Been Defrauded

Pension scams are among the most financially and emotionally damaging forms of fraud. Unlike a stolen credit card — where the bank refunds the money — a pension scam can take years of savings in a single transfer. And uniquely, pension scams can leave the victim with an HMRC tax bill on top of the loss: if funds went to an unauthorised scheme, HMRC charges the taxpayer for the unauthorised payment even if they were deceived.

If you believe you have already been the victim of a pension scam — or you are concerned that a transfer you made was not legitimate — this guide explains the steps to take immediately, the realistic recovery options, and what to expect.

Step 1: Secure Your Remaining Assets

If you still have pension funds that have not been transferred, or if you become aware of the scam before the transfer completes, contact your pension scheme immediately to place a hold on any pending transfer instructions. Pension providers are required to conduct due diligence under the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 — if they have not done so, they may be liable.

If funds have already gone, do not make any further transactions with the scheme or individuals involved. Do not respond to "recovery room" frauds — a second fraud targeting those who have already been scammed, often purporting to be a law firm or recovery service that can get your money back for an upfront fee. These are almost universally fraudulent.

Step 2: Report to Action Fraud

Report the fraud to Action Fraud as soon as possible:

• Online: actionfraud.police.uk
• By telephone: 0300 123 2040 (available from abroad)

Provide as much detail as possible: the name of the scheme you transferred to, the names of individuals who contacted you, dates of transfers, amounts transferred, and any documentation you have. Action Fraud will issue you a crime reference number.

If you are overseas, you may also wish to report to the relevant local authority in your country of residence, though the primary reporting jurisdiction for UK pension scams is the UK.

Also consider reporting to:

• The Financial Conduct Authority (FCA): fca.org.uk/consumers/report-scam — particularly if FCA-regulated individuals or firms were involved
• The Pensions Regulator: tpr.gov.uk — which can investigate occupational pension schemes and employers
• The Serious Fraud Office: sfo.gov.uk — for large-scale and complex frauds

Step 3: Understand Your HMRC Position

If funds were transferred to an unauthorised payment arrangement — a scheme that HMRC does not recognise as a registered pension scheme, or a scheme that made unauthorised payments — you may be subject to:

• Unauthorised payments charge: 40% of the amount paid
• Unauthorised payments surcharge: a further 15% if the payment exceeded 25% of the value of the pension fund at the time
• Combined charge: up to 55% of the transferred amount

This tax liability is the most financially damaging aspect of pension liberation fraud, because it is charged on the total amount transferred — including any funds that the scammer has already taken as fees. The taxpayer can effectively end up owing HMRC more than they received.

HMRC's approach to victims: HMRC acknowledges that individuals who were genuinely misled and acted in good faith may be entitled to some relief. A statutory relief allows a reduction in the surcharge (15%) for individuals who made a transfer to a registered pension scheme that subsequently paid unauthorised payments without the member's knowledge — but the 40% charge generally remains.

If you have received an HMRC assessment for unauthorised payment charges, take urgent advice from a tax adviser experienced in pension fraud cases. HMRC has time-to-pay arrangements and, in some cases, has reduced assessments where evidence of fraud was strong.

Step 4: Check for FCA-Regulated Adviser Involvement

If you were advised to transfer your pension by an individual or firm that held (or claimed to hold) FCA authorisation, you may have a claim against:

1. The adviser firm directly — if the firm still exists and has professional indemnity insurance, making a formal complaint and potentially receiving compensation directly
2. The Financial Ombudsman Service (FOS) — if the firm rejects your complaint or fails to respond, you can escalate to the FOS, which can award up to £455,000 for regulated complaint acts since 1 April 2019 (the 2026/27 limit, uprated each April with CPI)
3. The Financial Services Compensation Scheme (FSCS) — if the adviser's firm has since become insolvent or is unable to pay, the FSCS pays compensation of up to £85,000 per eligible claim for investment advice

Critical: you must verify that the individual who advised you was genuinely FCA-authorised at the time — not merely claiming to be. Check the FCA Register (register.fca.org.uk) by searching the individual's name and firm. Fraudsters sometimes use the names of real, authorised firms or individuals without any connection to them ("clone firm" fraud). If the person who advised you is not on the register, the FSCS and FOS routes may be unavailable.

Step 5: Engage the Pensions Ombudsman

The Pensions Ombudsman (pensions-ombudsman.org.uk) investigates complaints about the administration and maladministration of pension schemes. This is a separate body from the Financial Ombudsman Service.

The Pensions Ombudsman can be relevant if:

• The pension scheme that transferred your funds failed to conduct proper due diligence under the transfer regulations and this contributed to your loss
• The receiving scheme's trustees or administrators were involved in maladministration
• Any registered pension scheme was involved and behaved improperly

Since 2021, pension schemes have been required to check specified "amber flag" and "red flag" indicators before proceeding with a transfer. If your scheme transferred without checking these indicators, the scheme may bear some responsibility for enabling the fraud. The Pensions Ombudsman has upheld complaints in such cases and ordered schemes to make partial reparation.

The Ombudsman does not have the power to award unlimited compensation — decisions are binding on the parties but the amounts may be limited. However, even partial recovery through this route is meaningful.

Step 6: Consider Civil Litigation

If the scammer's identity is known and they are traceable in a jurisdiction where judgments can be enforced, civil litigation via specialist pension fraud solicitors may be worth considering. Firms specialising in this area include those who work on a conditional fee arrangement ("no win, no fee") — which limits the financial risk to the claimant.

Civil litigation is more realistic where:

• The scammer operated through a UK-registered company that has been dissolved, because Companies House can provide shareholder and director information
• Assets have been frozen by Action Fraud or other authorities as part of a criminal investigation
• There is a professional third party (solicitor, accountant, introducer) who can be shown to have been negligent

For most victims of pension liberation fraud, however, the scammer has disappeared with the funds and civil recovery is not economically viable. The focus should be on the regulatory routes (FSCS, Ombudsman) rather than direct recovery from the fraudster.

Step 7: Seek Specialist Legal Advice

This is not an area where general solicitors are equipped to help. Seek out solicitors who:

• Specialise in pension fraud or financial mis-selling claims
• Have demonstrable experience with FSCS claims for pension transfer advice
• Can advise on the interaction between the HMRC tax charge and civil recovery
• Are regulated by the Solicitors Regulation Authority (SRA) — verify at sra.org.uk

Be extremely cautious about any firm that approaches you proactively, demands upfront fees, or makes guarantees about recovery. These are often secondary frauds targeting victims of the original scam.

Realistic Expectations

It is important to be honest about what outcomes are achievable. In many pension scam cases:

• The funds are irrecoverable from the fraudster, who has dissolved companies, moved assets overseas, or disappeared
• The HMRC tax charge is real and may require negotiation and time to pay
• FSCS compensation of up to £85,000 may be available if a regulated adviser was involved — but many pension liberation frauds involve unregulated individuals, so this route may be closed
• Partial recovery via the Pensions Ombudsman (for scheme maladministration) is increasingly possible following the 2021 transfer regulations, but amounts may not be large
• The FOS can award more (up to £455,000 for 2026/27, uprated each April with CPI) but only where a regulated firm's conduct is in question

For many victims, the realistic outcome is a painful acknowledgement that a significant proportion of the pension has been lost, combined with a negotiated HMRC position that may allow the tax charge to be paid over time. This is a devastating outcome — but acting promptly and correctly through the above routes maximises the chance of some recovery and prevents the situation from worsening.

Prevention: The Better Path

For those who have not yet been defrauded but who are approached with investment or pension transfer opportunities:

• Check the FCA ScamSmart tool (fca.org.uk/scamsmart) before engaging with any unsolicited pension approach
• Verify any firm on the FCA Register before transferring any pension funds
• Never transfer to a scheme you have not independently verified
• Be sceptical of promises of early access, guaranteed high returns, or pressure to act quickly
• Contact your existing pension provider or a regulated financial adviser before making any pension transfer decision

How Global Investments Can Help

If you or a family member has been affected by a pension scam, we can help you understand your options and connect you with appropriate specialist resources — including regulated pension solicitors, HMRC tax advisers experienced in pension fraud cases, and regulated financial advisers who can advise on rebuilding retirement provision.

For clients around the world who have concerns about past pension transfers, or who want independent verification of a transfer they are considering, our regulated advisers are available to review the situation before any irrevocable step is taken.

The guidance in this article is general in nature and should not be relied upon as legal or tax advice specific to your circumstances. The recovery options described depend heavily on the specific facts of each case. We strongly recommend taking specialist professional advice in addition to following the reporting steps described here.