Pension transfer scams – be aware

Pension transfer scams – be aware

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult an independent financial adviser.

Moving your pension to another scheme can be a great option for many people – saving money and opening up flexibility. Yet there are risks which you need to be aware of. In 2020, as people increasingly turned their attention to their retirement income, pension scam alerts dramatically rose – with 76% of transfers triggering a “potential scam” warning. More than half of these were related to fees, including a lack of understanding amongst pensioners about how fees worked.

Here at Cedar House, we believe that you shouldn’t necessarily be stuck with a pension which is not right for you. However, it is also vital to protect yourself from fraud – especially when your life savings are involved. We offer our thoughts on this important subject below. If you’d like to find out more or discuss your own pension/retirement with us, please contact our team here at Cedar House for more information or to access personalised financial advice:

020 8366 4400 or


Why do people transfer their pensions?

There are many types of pension and not all of them may suit your financial goals or offer you the best deal. For instance, perhaps your workplace pension only offers a limited range of funds for you to invest in. For some people, these may come with high fees, low historical data and a poor performance record. In which case, it could lower costs and widen pension investment options to concentrate the remaining contributions in another scheme outside of your workplace – e.g. a SIPP (self-invested personal pension). Moreover, the funds in your old scheme could be transferred over to the new one, thus saving even more and benefiting from further growth.

Another common reason to consider a pension transfer relates to estate planning. In particular, final salary pensions (or “defined benefit” pensions) cannot be passed on to your children when you die. However, in 2020-21 defined contribution pensions – i.e. those which involve building up a “pot” of money – can be bestowed as an inheritance. Moreover, if you die before the age of 75 then the pension is handed to your beneficiaries tax-free. After this age, their withdrawals from your pension will be subject to their income tax rate. As such, those with final salary pensions may be attracted to the idea of transferring to a defined contribution pension if their primary goal is to pass their pension to their loved ones as an inheritance, in the future.


How do pension transfer scams happen?

Unfortunately, pension scams in 2021 are more sophisticated than ever before. Traditionally, a scammer might phone you up – out of the blue – with a pension offer that sounds too good to be true. This could be a “time-limited” opportunity to invest in an unusual investment product, which is often based off-shore, with the promise of high and “guaranteed” returns. 

Needless to say, if this type of phone call comes your way, then be very careful. Do not give out any personal data on the call, and do not rush into a decision – even if the caller pressures you. As for the caller’s details and run the conversation past your financial adviser. They will be able to check everything for you, and help identify anything suspicious.

Today, however, increasingly pension scams are occurring online – with fraudulent emails, texts, social media adverts and mobile apps. These can be especially threatening to older, vulnerable people who lack the necessary knowledge and awareness about these technologies. Moreover, these are less regulated by the UK government. Whilst there is a “cold calling ban” on pensions now, for instance, there is no similar regulatory framework in place for digital communications. 

However a scammer may communicate with you, the strategy is usually the same – to convince you to part with your life savings by transferring it to an “investment”, and then run away with the money. Falling victim to such a scam can be devastating and irreparable, especially if the scam occurs abroad; in which case, you will likely never get your money back. In light of this, here are some ways to identify pension transfer scams:

  • The person contacting you may claim that they can enable you to access your pension pot, tax-free, before the age of 55. This is a lie. In 2020-21, it is against the law.
  • You may be sent a package/papers by courier, asking for an immediate signature.
  • You may be asked to put all of your money into a single investment, which is very high risk. Most financial advisers like ourselves will recommend spreading your investments across multiple assets and opportunities.
  • The contact details available to you may be minimal – i.e. just a mobile phone number and P.O. box address.
  • You may be pressured into acting immediately before the opportunity “passes you by”.
  • You could be offered “guarantees” or iron-clad promises of certain returns. No legitimate financial adviser can promise what will happen in the future!
  • The information you get about the “investment opportunity” may be obscure, leaving you feeling like you do not understand it. Needless to say, it is generally unwise to invest in anything you are not comfortable with or do not fundamentally comprehend.



Interested in discussing your financial plan with an experienced financial adviser? Get in touch today to discuss your financial plan with a member of our team here at Cedar House via a free, no-commitment consultation:

020 8366 4400 or


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