Article Summary

Scams are becoming increasingly prevalent and sophisticated. You might think that you or someone you love would never fall victim to such a scam because you are too savvy, but the fact is fraudsters target everyone. You do not have to be retired or close to retirement age; scammers can target you at any age with appealing-sounding offers or investments and dupe you into handing over your life savings.

To protect you from the scam, the government has put in place comprehensive regulations. Furthermore, with the flagging regulation in place since November 2021, the scam may be impossible to perpetuate. However, fraud is becoming more sophisticated and difficult to detect. As a result, it pays to be vigilant.

By being aware of the risks and taking simple precautions, you can protect yourself and your loved ones from these frauds and scams. We would like to highlight some steps that can be taken to avoid scams. Watch a video below where we discuss the matter in one of our YouTube video.

Choose the Right Independent Financial Advisor 

One thing to remember if you get a call from someone claiming to be an IFA is to make sure that whoever you deal with is regulated by the Financial Conduct Authority (FCA), which works to protect consumers from the harm that can be caused by bad behavior in the financial services industry. Inquire about their license or conduct your own due diligence by searching the financial services register.

Only a qualified financial advisor can advise you on the best products for your needs, allowing you to make the most of your money. A number of companies have a thorough understanding of the nuances of Service life and can demonstrate specialist knowledge and experience in financial advice provision, as well as the knowledge, expertise, and ability to serve effectively.

According to FCA rules, an independent financial advisor must conduct due diligence and research, also known as fact-finding, to fully understand your financial circumstances and risk tolerance. Before making any recommendations, they must use this information to determine which products are appropriate for you.

The quality of the advice must be the same, but the direction may differ depending on your specific financial situation. In the case of pension transfer, your IFA may advise you not to transfer your DB pension because, based on the facts, DB pension transfer is inappropriate for your circumstances. On the other hand, your IFA may advise you to transfer your DB pension if they discover that you and your circumstances are a good fit for the transfer.

Avoid Cold Calling

All financial advisers must have a minimum qualification equivalent to an undergraduate degree, regardless of the type of advice they provide. All advisers must now achieve QCF Level 4—the equivalent of the first year of a bachelor’s degree. The Financial Services Skills Partnership has also developed Appropriate Exam Standards (AES), which are used by awarding bodies when developing new qualifications. 

Regulation and ethics, investment principles and risk, personal taxation, pensions, and retirement planning, financial protection (Level 3), and financial planning practice are the subject areas in which IFAs must be qualified under QCF Level.

Although the Retail Distribution Review (RDR) legislation requires all advisers to be qualified to a certain level, it’s worth double-checking that they are. Look for additional qualifications as well, as this will demonstrate that they have gone above and beyond.

A qualified and professional independent financial adviser does not hawk for business, so if you receive a cold call, text message, or knock on your door, it is almost certainly a scam. A skilled fraudster may pretend to be returning your call, hoping that you have recently contacted a legitimate service or adviser. Check that an adviser is registered with the Financial Conduct Authority (FCA) or call 0800 111 6768, and call them yourself on the number listed on the FCA’s website, not any number given to you by a cold caller.

A caller may also claim to be from a government service such as Pension Wise, the Department for Work and Pensions, or something similar. Don’t be fooled; these government services will never call you first.

Avoid Any Offers That Allow You To Access Your Pension Pot Before Reaching The Normal Retirement Age

The regulation states that you cannot access your pension before the age of 55 if you are a member of a defined contribution scheme or before the age of 65 if you are a member of a defined benefit pension. Some exceptions may apply, but in general, if you attempt to access your DB or DC pension scheme before the normal retirement age, you will be charged with higher tax and an exit penalty charge.

As a result, anyone offering this is asking you to break the law, and thus they are already criminals. Simply say no. You could also notify the FCA or Action Fraud. This scam can take many different forms, so be on the lookout for them all. The scheme could be described using terms like these: Pension liberation, early pension access, and pension loans, also known as ‘cashing in’ your pension, Whatever they call it, if it means receiving money from your pension before the age of 55, it’s a scam. It’s as simple as that. Even if you do get some money out of your pot, the fraudster will most likely get the majority of it.

Keep An Eye Out For Any Hidden Fees Or Charges

If the transfer value of the pension you want to transfer is £30,000 or more, the regulations require you to seek financial advice first. Furthermore, this is not a box-ticking exercise; your IFA will not simply sign a letter authorizing the transfer but will charge you for full advice. This could be quite costly.

The reason for this is that by advising you to transfer, the IFA assumes liability and risk if your decision is poor. For example, the stock market could crash shortly after your transfer, wiping out a large portion of your pension pot. Or you might unintentionally draw too much and deplete the pot too quickly. 

The IFA is responsible for the advice they provide as a regulated adviser, which is why it will not simply wave your decision through. Remember that this is a good thing that will ultimately protect you.

Before considering advice time, staff costs, office costs, and all other business operational costs, financial advisers incur significant costs for regulatory fees, regulatory restrictions, ombudsman levies, financial services compensation scheme levies, and insurance costs.

Because of the logical reasons stated above, free advice is nearly impossible, or if it is, the hidden cost will appear sooner. Even though the commission was banned by the FCA, there is still a large gap that scammers can exploit, such as by putting your money in unregulated offshore bonds. Any offer that allows you to access a large portion of your pension more than 25% tax-free is a tax-avoidance scheme and should be treated with extreme caution. Everyone is entitled to take 25% of their pension pots tax-free, but anything more is either a complicated scheme, illegal, or both. The risk is not worth it.

Be wary of anything involving foreign investments or property investments. Although these are not necessarily disadvantages, a pension is an excellent investment vehicle in and of itself, and you are unlikely to be better off elsewhere.


Always hire a prudential advisor who prioritizes your interests over their own. Finding a competent financial advisor does not have to be difficult. Learn the distinction between a fee-only and a fee-based advisor. 

While the former is paid solely by the fees their clients pay, the latter may be paid commissions in addition to client fees for recommending insurance policies or financial products. This may result in a conflict of interest. When you receive advice from a fee-based professional, make sure you understand what it is based on, what role it is being given, and how the advisor may benefit.

Get in touch with one of our FCA-regulated and qualified IFAs to avoid pension scams in a free initial consultation through the button in the right side.

Our Founder & CEO -
Dominic James Murray

I have been in the UK Pension Transfer industry for over 11 years, and have witnessed seismic changes in the UK Pension rules over the course of that decade. Most to the benefit of the UK Chancellor or to Chequer!

My 5 years as CEO of Cameron James, have certainly been the most rewarding. My goal, has been a simple one. Provide clients with transparent financial advice on a low-cost basis, for them to make informed decisions to protect their families best interests.

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