Article How to educate employees about pension scams

Pension scams are a concerning and all-too common threat in the UK, costing victims more than £26.4 million between 2020 and 2022.¹ And in a challenging economic landscape, your employees might be more vulnerable than usual to falling for them, particularly if met with promises of accessing their savings early.

The consequences of scams can be more than financial. It can seriously impact an individual’s confidence, mental wellbeing and even their wider relationships. By educating and raising awareness of potential scams, you could protect your employees and their money – and potentially protect your business from additional threats.

Here are some common types of pension scams, with guidance on how to educate and support your employees on the topic.

What types of pension scams are there?

Pension scams can come in many different forms. Some common ones include:

Early pension release scams

Most people won’t be able to access their pension savings before the age of 55 (rising to 57 in 2028). There are a few exceptions – such as ill health – but withdrawing from their pot for any other reason can result in a significant tax charge. Many people won’t know this, and scammers rely on this fact to lure them out of their savings. A common tactic is to contact scheme members and offer them a way to borrow money from their fund, often calling it ‘pension liberation’. Rather than helping the individual boost their finances, this results in money being transferred to the scammers instead.

Pension review scams

The offer of a free pension review might sound appealing – 44% of people would be tempted according to an FCA study of over 1,000 people in the UK.² But it’s often a scam. ‘Companies’ offering the review will be trying to get scheme members to transfer their funds to a fraudulent scheme or high-risk investment. Either way, this will almost certainly result in the money ending up in scammers’ pockets.

Risky investments

False promises are the hallmark of many scams, particularly when it comes to investments. Scammers will often promise fantastic returns if the pension fund is transferred to a high-risk and often unregulated investment, such as overseas property development, biofuels or storage units. These could simply be badly-run investments but could also be outright scams, and again, your employee is unlikely to see any form of return.

Advice scams

Similar to review scams, advice scams will offer free pensions advice, but with an ulterior motive. The aim will be to get scheme members’ details or authority to transfer the fund and can be the first step to other pension scams. They might even claim that they don’t have to be authorised or mention that they’re authrorised, even though they’re not.

Scams aren’t always immediately obvious, and in many cases the initial contact could even seem legitimate as the scammers attempt to build trust. The rise of artificial intelligence (AI) can make things even riskier, with voice cloning meaning victims can be easily targeted and tricked into parting with their savings. Another study of over 1,000 UK respondents found that 24% have already been targeted by voice cloning or know someone who has, and many lost money as a result.³

It’s important to remember that other forms of financial fraud exist as well, such as identity fraud and investment scams. The huge number and variety of scams out there means it’s vital for employees – and businesses – to be on their guard. You can find out more about other threats to watch out for in our fraud hub. 

How can you protect your employees?

Building awareness around scams is vital. Not only can it protect your employees, but it could help to make them more cautious of potential threats to your business, too. Here are some ideas to consider implementing in your workplace.

Help them spot a scam

Highlighting the warning signs that employees need to look out for is a key step in boosting awareness. Signs that they could be potentially coming up against a scam include:

• Cold calling or any other form of unexpected contact, such as through text message or email. Phishing is a common tactic and can be the first step to scheme members revealing sensitive pension or other personal information.
• A sense of urgency and high-pressure sales tactics, where employees are pushed to make quick decisions. Nothing will ever be so urgent that they can’t think things over and seek independent advice, so if they’re being pressured, it's likely a scam.
• The caller falsely claiming that they don’t need to be authorised.
• Limited contact details or no way to call the company back.
• Complicated-sounding schemes or company structures, or uncertainty where the money will go or how to get it back out. Unregulated investments fit in here too, as do anything that would be difficult to sell.
• The offer of guaranteed returns. If it sounds too good to be true, it probably is.

Offer workshops or webinars

Do you have the ability to bring in fraud experts for an in-house scam awareness workshop, or could you offer webinars or similar guides? Expanding on current training could also be an option. For example, if you already offer security training for business protection, could you include information about protecting employees’ personal accounts as well?

Focus on their financial wellbeing as a whole

Supporting your employees to improve their financial wellbeing can have a whole range of benefits. It can make them more knowledgeable, confident and resilient, which in turn can help them make better financial decisions and plan more effectively for retirement. Being more prepared can put them under less financial stress, making them less likely to fall victim to pension scams as a result.

Signposting to the FCA’s ScamSmart or the warning list of unauthorised firms

This is where employees will be able to get up-to-date information on scams, as well as information on what to do if they’ve been targeted. It can also keep them updated about new scams emerging.

FCA links:

• ScamSmart
• List of unauthorised firms

Tell your employees what to do if they’ve fallen victim

Make them aware that they should contact their bank and pension provider, and report the incident to the FCA via ScamSmart and the police via ActionFraud. Those in Scotland should report it to Police Scotland instead. Our article on what to do if you’ve been scammed could be a great resource for your employees as well. 

Education is key

Being targeted by a scam can be devastating for your scheme members. Not only can their savings vanish, but so can their confidence, with it having a huge impact on mental wellbeing. By offering the right support and guidance, you can help protect your employees as scams become increasingly sophisticated in nature.

If your employees are looking to move or access their pensions due to money worries, we recommend they speak to an independent financial adviser. They can find one on the Government’s MoneyHelper website. There’s likely to be a cost for financial advice. However, MoneyHelper also offer free and impartial guidance on lots of financial topics, including pensions, savings and scams.

We’re here to help you provide the support necessary. Find out more about scams and how to spot them in our dedicated fraud and security hub