Over 4.5 million UK adults have been approached about potential financial scams in the past 3 months. We include tips to help avoid them. 

One in eight (12%) of non retired UK adults have been approached by phone, text, or email offering free pensions advice, a free pensions review, investment opportunities or a tax refund in the last three months, according to new research¹ by Canada Life. This equates to over 4.5 million adults who have been potentially exposed to a financial scam of some description, despite the ban on pension cold calling being introduced in January.

“Adopt the simple rule of thumb, if it appears too good to be true, it inevitably is.”

Canada Life is warning that people need to be alert to the dangers of financial scams and has published tips to help the unwary.

Andrew Tully, technical director at Canada Life, said: “Falling prey to a financial scam can be devastating, not only for the person involved but also for family and friends. Despite the ban on pension cold calling being introduced back in January, these unsolicited contacts offering ‘free pension reviews’ continue. People need to be on constant alert for any signs of scams as the scammers continue to evolve and utilise ever more sophisticated and ingenuous ways of encouraging people to part with their hard-earned savings.

“Be scam aware and follow our tips to avoid the traps. Adopt the simple rule of thumb, if it appears too good to be true, it inevitably is. Simply walk away, hang up, or delete the email or text. There is no such thing as free money, after all.”

Tips to help avoid financial scams

If you receive an offer to help you access your pension savings before age 55. It is only possible to do this in rare situations, for example if you are very ill, so always check with your pension provider before making any decisions.

1. A recommendation to take a large amount of money, or your whole pension pot, in a lump sum and invest it elsewhere. Seek advice, check the ScamSmart website, and be very wary of unsolicited offers of ‘amazing investment returns’
2. There can be significant tax implications if you choose to cash in your pension in one go, so check the tax position before you make any decisions. Tax calculators are available online including: https://www.canadalife.co.uk/tools/pension-tax-calculator
3. Warnings that the deal is limited and you must act now. This is a pressure tactic, and making any financial decisions should not be done under pressure.
4. HMRC will never contact you by email, phone or text informing you of a tax refund, so simply delete or ignore any contact made this way – HMRC will only contact you via post.
5. You are discouraged from seeking professional financial advice or talking to Pension Wise or The Pensions Advisory Service (TPAS). An adviser would be able to explain the rules and tax implications of different options and help you make the best choices for your personal circumstances, so be very suspicious if this is discouraged.
6. Contact by somebody who is not on the Financial Conduct Authority (FCA) Register. The Register is a public record of all the regulated firms and individuals in the financial services industry, including retirement income providers and investment companies https://register.fca.org.uk
7. Check the FCA ScamSmart website for known scams and use the tools to help identify a potential scam.
8. TPAS also has a great section on pension scams on its’ website https://www.pensionsadvisoryservice.org.uk/pension-problems/making-a-complaint/common-concerns/pension-scams
9. Check with your financial adviser, TPAS or your current pension provider if you have concerns, or call Action Fraud on 0300 123 2040 or online at https://www.actionfraud.police.uk