The Harsh Reality of Pension Scams

I met a potential new client recently. His story was both shocking and confounding and left me wondering how on earth we can protect people from the scourge of pension scams.

This blight, which destroys people’s retirements, can be hard to spot, especially when they are given a veneer of legitimacy by being accessible through otherwise reputable providers, regulated by the FCA.

My client and his wife are ex-police officers who decided to transfer out of the force’s final salary pension scheme and into a self-invested personal pension with just such a reputable provider.

The decision to transfer out was not necessarily where things went wrong. Having some additional flexibility over retirement income and inheritability can be useful. However, a pension wrapper of any shade or denomination is an empty vessel that must be filled with some kind of investment, even if it is simply a bank deposit account. This is where the problem lies.

Heed warning signs

Self-invested personal pensions, by definition, allow almost unlimited scope to the shares or assets held within, including unlisted companies or unregulated collective investments.
Again, the fact that such unregulated investments or unquoted stocks are allowed is not the problem, there will be perfectly legitimate reasons why certain individuals may wish to hold such assets.
No, the problems are twofold. Sadly, not all advisers have your best interests at heart and prioritise their own pecuniary gain and secondly, there is a willingness by some clients to accept the promise of high returns – the “next big thing” if you will.

I am not for a second suggesting clients are to blame, it is the adviser in the position of responsibility who is clearly at fault. Ultimately, though, you sign the document to enact the advice. Therefore, if we can better educate individuals to spot the warning signs, or simply encourage them to seek a second or even third opinion, we have a real chance of stopping scammers before any damage is done.

Here are my top tips for avoiding pension scams:


  • Check your adviser’s credentials and qualifications
  • Check the pension provider is regulated
  • Check the underlying investment is also regulated
  • Get a second or third opinion if you have any reservations
  • Check the FCA’s Scamsmart pages
  • Search online for negative headlines about your adviser, pension provider or investment


  • Invest in shares of a single company unless you can afford to lose everything!
  • Invest in unregulated investments unless you can afford to lose everything!
  • Chase high returns. The return you need is the one that meets your objectives, for example, to provide you with an adequate income in retirement.
  • Rely on the financial services compensation scheme to cover you if you have invested in unregulated funds


My client has been fortunate enough to recoup some of his lost funds in compensation, however, nowhere near what he invested and that isn’t the end of the story…
If you do manage to claw some money back, it will fall outside a pension wrapper and HMRC will want their share. If funds aren’t available to pay them, it could mean having to sell your home.
So please be careful. Do your homework and choose wisely who you trust with your future.
If you would like to discuss potential pension investments, don’t hesitate to contact me on (01246) 298181 or email: