COVID-19 Pension Frauds

Victims of pensions scams could lose 22 years’ worth of savings within 24 hours, according to the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR).[1]

As the instability of financial markets prompts savers to consider transferring their pensions, the risk of being targeted by fraudsters increases. The use of pension offers aimed at those worried about the impact of coronavirus on their investments is just another example of how fraudsters are capitalising on the COVID-19 crisis.

What is pension fraud?

In a pension fraud, fraudsters seek to persuade pension savers to transfer their entire savings, or to release funds from it. The funds are then invested in unusual and high-risk investments such as overseas property, renewable energy bonds, forestry, storage units, or the funds are simply stolen outright.

Examples of pension fraud

Action Fraud warns of the following scam offers[2]:

  • free pension reviews
  • higher returns – guarantees of better returns on pension savings
  • help to release cash from pensions for under 55 year olds also referred to as “pension liberation” or “pension loan”
  • high-pressure sales tactics – these include the pressure of ‘time-limited offers’
  • unusual investments – which tend to be unregulated and high risk, and may be difficult to sell if access to money is needed
  • complicated structures where it isn’t clear where the money will end up
  • arrangements where there are several parties involved all taking a fee (some may be based overseas), which means that the total amount deducted from the pension is significant
  • long-term pension investments – in these cases, it could be several years before it becomes apparent that something is wrong

Impact of pension frauds

The impact on pension fraud victims is devastating. Many lose, and are unable to get back, their entire life savings. If withdrawn before the age of 55, savers also face a high tax bill from HM Revenue and Customs (HMRC), even if they offer to put money back into their pension or have spent it.[3] The impact on financial security and retirement is clearly immeasurable.

Protection from pension scams

The regulators recommend four simple steps for savers to protect themselves from pension fraud[4]:

  1. Reject unexpected pension offers whether made online, on social media or over the phone;
  2. Check who you’re dealing with before changing your pension arrangements – check the FCA Register or call the FCA helpline on 0800 111 6768 to see if the firm you are dealing with is authorised by the FCA;
  3. Don’t be rushed or pressured into making any decision about your pension;
  4. Consider getting impartial information and advice.

I have been the victim of pension fraud, what are my options?

Prevention of pension fraud is ultimately better than cure. You may find that you have reported the matter to the police but have been told the matter will not be investigated due to lack of resources or because the police view it to be a civil matter. However, private prosecution is an option available to those who find themselves victims of pension fraud. Section 6(1) Prosecution Offences Act 1985 provides the right for individuals and companies to bring a private prosecution. Private prosecutions can be quicker, more focussed and more efficient than public prosecutions, especially in cases involving fraud. As private prosecution specialists, Edmonds Marshall McMahon has an experienced team of senior prosecutors who are able to explore this option with you.


Marie-Claire Amuah