Pension Scam Recognition and Prevention: A Practical Guide

Pension fraud is among the most financially devastating forms of financial crime. Victims typically lose not just their pension pot but often a lifetime's savings accumulated over decades. The Pension Scams Industry Group has estimated that around £10 billion may have been lost to pension scams by some 40,000 people since 2015 (based on an assumption that roughly 5% of transfers show typical scam warning signs) — far in excess of the tens of millions formally reported to Action Fraud, because many victims do not realise they have been defrauded until years later when they try to access their retirement funds.

For internationally mobile individuals with UK pension interests, the risk is heightened. Expats are disproportionately targeted because they are harder to protect through UK consumer safeguards alone, and because the geography of their investments — distributed across multiple jurisdictions — creates complexity that fraudsters exploit.

The Cold Contact Ban

Since 9 January 2019, cold calling about pensions has been banned in the UK. The ban was introduced by the Privacy and Electronic Communications (Amendment) Regulations 2018, and is enforced by the Information Commissioner's Office (ICO), which can impose civil monetary penalties on those who breach it. It prohibits unsolicited direct marketing calls about pension products or transfers, unless:

• The caller is FCA-authorised and the individual already has an existing client relationship with them, or
• The caller is a trustee or manager of a pension scheme in which the individual is a member, and the recipient consents to or expects the call

If you receive any unsolicited call about your pension — or "free pension review" offers arriving out of nowhere — it breaches the cold-calling ban. You should not engage, regardless of how professional or official the communication appears. Report it to the Information Commissioner's Office (ICO).

This rule applies globally to UK pension holders. An expat in the UAE receiving a cold call from someone claiming to represent a "UK pension specialist" or offering a "pension consolidation review" has received an unlawful communication about a UK pension matter if the caller intends to discuss or arrange UK pension transfers.

Warning Signs: The Red Flags

The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) publish amber and red flag lists that have become the industry standard for identifying fraudulent approaches. Knowing these in advance is the single best protection.

Red flags — stop immediately:

• Guaranteed returns or risk-free investments. No legitimate pension investment can guarantee returns. Any promise of fixed returns above gilt rates (e.g., 8–12% per year "guaranteed") is either fraud or an unregulated investment that will almost certainly fail.
• Claims of a legal loophole. Scammers frequently assert that they have found a legal mechanism allowing you to access pension funds before age 55 (or 57 from 2028) without tax penalty. No such loophole exists. Accessing pension funds early through unauthorised means triggers an unauthorised payment charge of 40% on the member, plus a 15% surcharge where the unauthorised payments reach 25% or more of the fund in a year — a combined member charge of up to 55% (a separate scheme sanction charge can fall on the scheme administrator).
• Pressure to transfer quickly. Legitimate pension transfers take weeks or months of paperwork and compliance processes. Any adviser telling you to act "before the offer expires" or "this weekend only" is applying fraudulent pressure.
• Unsolicited offer to release tax-free cash. You can only access your 25% PCLS when you reach the minimum pension access age, crystallise benefits, and use a legitimate scheme. Anyone offering to release it early is committing fraud.
• Unknown third-party investments in the receiving scheme. If the transfer is to a SIPP or scheme holding assets that are obscure, overseas, unregulated, or illiquid — hotel rooms, storage units, green energy projects in unrecognised jurisdictions — this is a classic vehicle for extracting pension assets into fraudsters' control.

Amber flags — proceed with caution and seek independent advice:

• High-pressure sales tactics or urgency around a time-limited offer
• Unexplained investment strategies or overly complex structures with little transparency
• Investment in a single asset class or geographic concentration (e.g., 100% in overseas property or unlisted bonds)
• Requests to sign a power of attorney over your pension account
• Unusually high adviser charges (e.g., upfront fees of 10–15% of transfer value)
• Introductions via word of mouth from recent acquaintances who have "done the same thing"

Section 48 Pension Guidance and Transfer Safeguards

Under the Pension Schemes Act 2021, trustees and scheme managers of defined benefit and safeguarded-benefit schemes must check whether members have received appropriate independent guidance before processing certain types of transfer. This "safeguard" applies specifically to transfers involving enhanced or safeguarded benefits (including DB transfers) where the member is not receiving regulated financial advice.

Stronger nudge to guidance: Before a DC scheme processes a transfer, the provider must now apply a "stronger nudge" — actively directing members to Pension Wise (the government's free guidance service) before the transfer can proceed. This is mandatory and not just a suggestion.

Transfer red flag checks: Since November 2021, pension scheme trustees must carry out enhanced due diligence on all transfer requests, looking for the following specific indicators:

1. The receiving scheme cannot be verified on HMRC's registered schemes list
2. An unregulated introducer was used to arrange the transfer
3. The member cannot confirm the involvement of an FCA-regulated adviser
4. The member reports cold contact as the origin of the transfer request
5. The receiving scheme holds or proposes to hold unusual or illiquid investments
6. The receiving scheme has been subject to Pensions Regulator enforcement action

Where amber or red flags are present, trustees can refuse to process the transfer or pause it pending additional investigation. This is a statutory duty, not a discretion.

QROPS-Related Fraud Patterns

Qualifying Recognised Overseas Pension Schemes (QROPS) are legitimate transfer vehicles for UK expats with UK pension assets. They are also vehicles frequently used in pension fraud, because they are less regulated than UK-registered schemes and the assets can quickly pass out of HMRC's reach.

Common QROPS fraud patterns:

• Fake QROPS: A scheme claims to be a QROPS but is not registered on HMRC's QROPS list. Verify any overseas pension scheme at gov.uk/qrops. Sending money to an unregistered overseas scheme triggers a full unauthorised payment charge.
• QROPS jurisdiction mismatches: The overseas transfer charge (a standalone 25% charge) applies unless an exemption is met. Scammers may misrepresent the exemption position to persuade members that a transfer is charge-free when it is not.
• Offshore investment injection via QROPS: Money is transferred to a legitimate-looking QROPS, then immediately invested in illiquid or fraudulent assets that are impossible to exit or monitor. The QROPS shell is legitimate; the assets within it are fraudulent.
• Exit fee imprisonment: Schemes with no meaningful investment but high exit fees that effectively prevent members from recovering funds or transferring out.
• Linked loans: Members are offered a loan secured against their pension fund while the fund is simultaneously transferred to a fraudulent vehicle. The loan obligation remains while the pension assets disappear.

Always verify QROPS credentials independently on the HMRC list, check the jurisdiction's regulatory standards, and ensure any recommended QROPS adviser holds FCA authorisation for pension transfer advice.

Verifying Your Adviser: The FCA Register

Before engaging any adviser about pension transfers — UK to UK, UK to QROPS, or involving any overseas pension products — verify their credentials on the FCA's Financial Services Register at register.fca.org.uk.

Specifically, check that:

1. The firm holds FCA authorisation (not merely "appointed representative" status in an unrelated area)
2. The individual adviser is listed as an authorised person and holds the relevant pension transfer qualification
3. The firm's permissions include "advising on pension transfers and opt-outs" and, if relevant, "investment management"
4. No restrictions, requirements, or enforcement notices are listed against the firm or individual

Fraudsters commonly claim FCA registration while naming a different firm or using a firm's name fraudulently (so-called "clone firm" fraud). Always use the FCA's own reference number to verify, not a number provided by the adviser themselves.

Reporting Suspected Pension Scams

Action Fraud (0300 123 2040 / actionfraud.police.uk): The UK's national fraud reporting centre. Report any suspected pension fraud here, particularly for funds already transferred.

The Pensions Regulator (thepensionsregulator.gov.uk): Report suspicious pension schemes, scam transfers, or firms that appear to be operating unregistered pension schemes.

FCA (fca.org.uk/consumers/report-financial-scam): Report unauthorised firms or individuals offering pension services without FCA authorisation.

HMRC: Report suspected pension liberation schemes (attempts to access pension before age 55/57 through artificial structures).

If you believe you have already been scammed, seek advice from a regulated pension adviser immediately. In some cases, where employer scheme rules or regulatory provisions apply, there may be partial recovery routes — though in many cases, lost pension funds are not recoverable. Prompt reporting improves the likelihood of any regulatory intervention.

Protecting Yourself: A Practical Checklist

1. Never respond to unsolicited contact about your pension by any means.
2. Verify every firm and adviser on the FCA Register using the firm's registered number, not their own claimed number.
3. Take the free Pension Wise guidance appointment before any significant pension decision.
4. Be sceptical of any transfer to an overseas scheme — always verify QROPS status independently.
5. Do not allow anyone else to manage your pension on your behalf without independent verification of their authorisation.
6. If you have been approached or feel under pressure, call your current pension scheme administrator and ask them to flag the account before any transfer takes place.
7. Never sign over a power of attorney over pension assets to a third party you have not thoroughly vetted.

How Global Investments Can Help

Global Investments is an independent international advisory firm that advises internationally mobile individuals on legitimate pension transfer and restructuring solutions, with UK-regulated transfer advice provided by an FCA-authorised Pension Transfer Specialist we work with. We conduct due diligence on receiving schemes, verify QROPS credentials, and ensure that any transfer recommendation is grounded in genuine financial planning need rather than tax avoidance or fee extraction. If you have received an approach about your pension that does not feel right, speak with our team before taking any action. We can assess the approach and advise on the legitimate alternatives available to you. Contact us in confidence.

This guide is for information only and does not constitute financial or legal advice. Pension and regulatory rules can change. Always seek FCA-regulated financial advice before making pension transfer decisions. If you suspect fraud, report it to the relevant authorities without delay.