It’s Nearly Christmas – Beware The Pension Grinch

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Julia Grimes
Published: 08 Dec 2015 Updated: 03 May 2016

It’s Nearly Christmas – Beware The Pension Grinch

With Christmas approaching its not just shoppers who will be out in force, so will the pensions scammers. The sudden and significant change in pension legislation this year not only prompted temptation amongst potential pensioners to access their funds but also created a frenzy of confusion; an ideal scenario for any budding scammer. David Smith, Director of Financial Planning at Tilney Bestinvest, points at key areas to look for to spot a scam to ensure that you don’t become impoverished in retirement.

“Just five months into the new legislation we had already seen over £9million pounds of pensioners' monies stolen* and this number is likely to be artificially low, as many will have become victims of investment scams and won’t even know that their monies have been stolen – yet.

“The tactics used by pension scammers to encourage people to transfer their pension savings to them are constantly changing but include; offering free pension reviews/ health checks and promises of better returns on their savings, pension loans, upfront cash or other tempting promotions.

“There are a few tell-tale signs to look out for to ensure you are not taken in by a scam:

1. The Cold Caller

Very rarely, if ever, will an FCA-approved person contact you out of the blue ‘with an opportunity’. Invariably, taglines which require you to act now or sign up immediately are clear warnings of a scam, designed simply to pressurise someone into making a rash decision.

2. Key Phrases

‘Once in a lifetime opportunity’, ‘Guaranteed Returns’, ‘Completely Tax Free’, ‘Legal Loophole’:

We have all been quoted lines like this before but if any such terms are used by a ‘pensions' specialist’ ringing you out of the blue - hang-up immediately.

Such terms will rarely, if ever, be used by an FCA-approved person and certainly not in an opening conversation. Pensions are complicated and multi-faceted: It’s therefore nigh on impossible to provide any form of worthwhile guidance on a pension until ‘hard facts’ have been obtained in writing from the pension provider.

3. Offshore Opportunities

An immediate alarm should sound as soon as you are offered an ‘offshore opportunity’. Any schemes which involve moving your funds abroad have a high likelihood of being scams. They will typically be unregulated investments, which have little to no financial protection from the Financial Services Compensation Scheme (FSCS). Indeed, any offshore investments that go wrong can be very difficult to recover.

4. Residential Property Investment Opportunity

Whilst your funds are held within a pension, it is explicitly forbidden to invest in residential property and anyone falling foul will suffer severe financial penalties. In order to make such investments, you would have to physically withdraw your capital completely from the pension scheme prior to investment – an action which could cost thousands of pounds in tax.

5. Early Access

The new freedoms have offered greater access to pension funds than ever before. You must however, be over 55 years old to draw from your pension. Only if you are in certain professions or in cases of extreme ill health can you access your pension funds early. If neither applies to you, you’d better set your alarm for your 55th birthday…

6. Upfront Cash or Loans

Individuals are unable to obtain loans against their pension funds and any such arrangements would be classified as ‘unauthorised payments’ and bear large fines.

“Ultimately, nothing sums up the situation better than the old adage; if it sounds too good to be true, then it probably is. For good quality advice on the options available and a suitable path forward you should always meet with an FCA approved / regulated adviser. Use the FCA register to find and contact an approved adviser, or get in touch with Pension Wise for guidance.”

David Smith is available for further comment on 0191 269 9971 or

- ENDS –

* City of London Police

Press contacts:

Jason Hollands
0207 189 9919 / 07768 661382

Gillian Kyle
0203 818 6846 / 07989 650 604

Important information

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. Current or past yield figures provided should not be considered a reliable indicator of future performance.

This article is not advice to invest or to use our services.

Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change.

Please note we do not provide tax advice.

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About Tilney Bestinvest

Tilney Bestinvest is a leading investment and financial planning firm that builds on a heritage of more than 150 years. We look after more than £9 billion of assets on our clients’ behalf and pride ourselves on offering the very highest levels of professional client service with transparent, competitive pricing across our entire range of solutions.

We offer a range of services for clients whether they would like to have their investments managed by us, require the support of a highly qualified adviser, prefer to make their own investment decisions or want to take more than one approach. We also have a nationwide team of expert financial planners to help clients with all aspects of financial planning, including retirement planning.

We have won numerous awards including UK Wealth Manager of the Year, Low-cost SIPP Provider of the Year and Self-select ISA Provider of the Year 2013, as voted by readers of the Financial Times and Investors Chronicle. We are pleased that our greatest source of new business is personal referrals from existing clients.

Headquartered in Mayfair, London, Tilney Bestinvest employs almost 400 staff across our network of offices, giving us full UK coverage, and we combine our award-winning research and expertise to provide a personalised service to clients whatever their investment needs.

The Tilney Bestinvest Group of Companies comprises the firms Bestinvest (Brokers) Ltd (Reg. No. 2830297), Tilney Investment Management (Reg. No. 02010520), Bestinvest (Consultants) Ltd (Reg. No. 1550116) and HW Financial Services Ltd (Reg. No. 02030706) all of which are authorised and regulated by the Financial Conduct Authority. Registered office: 6 Chesterfield Gardens, Mayfair, W1J 5BQ.

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This release was previously published on Tilney Smith & Williamson prior to the launch of Evelyn Partners.