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Brexit and pension scams – everything you need to know

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As Brexit uncertainty rumbles on, many worried Brits are looking to invest their pension pots overseas for financial security. Unfortunately, scammers are taking advantage of this confusion and unrest, and have upped their game to target the most vulnerable.

Big business for fraudsters

Pension scams are big business for fraudsters. According to the FCA, victims lost an average of £91,000 each to criminals in 2017.

SIPPs provide an alternative for people who wish to move away from workplace pensions and invest elsewhere. Unfortunately, they can also be risky and unregulated. Many Sipps are mis-sold by advisers, or exploited by fraudsters. Large amounts of money are taken from hard-working Brits who can’t afford the risk.

Steps to tackle Brexit scammers

Thankfully, the government has been taking steps to tackle these fraudsters. Earlier this year, cold-calling related to pensions was banned for UK companies. Any firm found to be breaking the new rules will be fined up to half a million pounds.

Additionally, the FCA has launched the user-friendly ScamSmart website. The consumer focused hub includes key information and a quiz for people to complete. It can help to decide to keep a pension pot or invest their money in a scheme.

The FCA’s research, which helped with the creation of the site, indicated that almost a quarter (23%) of 45-65-year-old pension savers would engage with a cold call from a company asking to discuss their pension plans. This is a common tactic used by scammers, despite the ban.

Greater access to pension pots

Glyn Taylor from APJ comments: “Uncertainty and confusion created by large political interruptions such as Brexit can create golden opportunities for fraudsters, as they capitalise on and fan the flames of anxiety surrounding finances.

“People over 55 now have more access to and more control over their pension pots, and although this is a good thing for many, it does leave people open to fraudulent activity as scammers go after large amounts of money.

“We have seen lots more activity and have received many calls from concerned pension holders who have been mis-sold risky SIPP investments, or caught out by scammers.”

Variety of tactics by scammers

Fraudsters use a variety of tactics, including cold calling, texting or emailing, offering eye-catching “guaranteed” high returns or glamorous overseas investment opportunities. They may also even claim to know about loopholes that unlock more tax-free returns or even offer to help access pension pots before the age of 55 – something which is virtually impossible except under rare circumstances.

Glyn continues: “Unfortunately, if it looks or sounds too good to be true, it probably is, and scammers are using the confusion and financial concerns caused by Brexit to capitalise on pension scams.

“Any offers to invest your whole, or a large sum or your pension pot, in unregulated overseas schemes should be met with extreme caution, especially if they have arisen from a cold call, text or email or an offer of a free pension review.”

Arm yourself against scams

APJ is imploring British pension holders to arm themselves against fraudsters before Brexit. You can read our guide to ensuring you don’t become a pension scam victim here. Age Concern also has lots of practical advice on its website, including a handy checklist.

If you think that you have invested in a scam pension scheme after a cold call, get in touch. Our experts can offer support and advice with your case.