Sadly, the last decade has seen an increase in pension companies being formed to defraud the public of their pension savings, by encouraging them to transfer their pension savings to unsuitable or bogus schemes. Unfortunately, the current cost-of-living crisis has led to an increase in these companies, with many using people’s possible financial difficulties to further manipulate them into transferring their savings. NILGOSC has pledged to protect scheme members by following the principles of the Pension Scams Industry Group (PSIG) Code of Good Practice.
What should you look out for?
According to the PSIG, victims of pensions scams report receiving cold or unsolicited calls, offers of free pension reviews, offers of upfront cash and promises of high investment returns, as warning signs of a scam. You may even be introduced to these companies by a friend or family member who is also unknowingly being scammed.
You should be very wary of a scheme offering to help you release cash from your pension before you’re 55. This is known as pension liberation and is almost certainly a scam which will result in you having to pay a tax bill of 55% plus other charges, and you could lose your entire pension pot.
- Do not click links or open emails from senders you don’t already know.
- Do not give out personal details like bank details, address, existing pension or investment details.
- Beware of adverts on social media channels and search engines like Google
If you suspect you have been the victim of a scam:
- Report it to Action Fraud
- Call 0300 123 2040
- Report it to the FCA
- Go to www.fca.org.uk/contact
- Call 0800 111 6768
How do you protect yourself?
Reject Unexpected Offers – chances are it’s high risk or a scam. If you receive a cold call regarding your pension, the safest thing to do is hang up – the call is illegal and probably a scam. If you have been offered a free pension review, please be very cautious. Professional financial advice on pensions is not free. A free offer from a company you have not dealt with before is probably a scam.
Check who you are dealing with – Is the individual or company offering you advice on transferring your pension qualified to do so? You can confirm this by checking the FCA Register and calling the Consumer Helpline on 0800 111 6768 to check the firm is permitted to give pension advice. There are many different areas of registration and it’s important the advice you receive is specifically on pension transfers.
Don’t be rushed or pressured into making a decision – This is another red flag of a possible scam. Take your time and make sure you are happy. This will be time well spent. If you make the wrong decision and transfer your pension to a scam scheme your monies are unlikely to be recovered. Better to make sure you are making the right decision at the outset.
Get impartial advice – You have worked hard to build up your pension savings, so a little extra time spent to make sure any transfer is in your best interest is very worthwhile. Consider the following:
- MoneyHelper provide free independent guidance (www.moneyhelper.org.uk) or call 0800 011 3797.
- Use an FCA registered adviser – they will be able to give you the best advice based on your own individual circumstances. Never take financial advice from the company that contacted you or an adviser they suggest, as they could be part of the scam.
And finally… Deciding whether to transfer out of the LGPS (NI) is a serious financial decision. Your pension with us is a guaranteed income at retirement. If you transfer your defined benefit pension to another type of scheme you will lose this guarantee, along with other Scheme benefits such as annual inflationary pension increases and guaranteed dependants’ benefits.
