Overseas Pension Scams | Non-UK Residents
Pension scams in the UK cost individuals more than £26 million in recent years. Upon relocating abroad the risks become even greater.
Below is a guide on how to avoid pension scams.
What Is A Pension Scam?
A pension scam aims to trick you into giving your pension funds away. This can be by transferring your pension pot to a fictitious scheme or releasing all or some of your pension savings.
Fraudsters can promise high returns with low risk, early access to your pension, or guaranteed returns. This can result in losing your life savings with little chance of getting your money back.
How Does A Pension Scam work?
Scammers can be persuasive with testimonials, credible websites, and marketing material that mirrors the real thing. No matter how financially savvy you may feel, anyone can be a victim of a pension scam.
Common scams include:
They are promising guaranteed or higher returns, often in overseas investments such as hotels and property, storage units, renewable energy bonds, forestry, or art.
They can help you access your pension early through a loophole or a loan. Note you cannot access your pension before age 55 (57 from 2028) unless under exceptional circumstances.
Worse still you can then incur a penalty tax bill of 55% on the amount you withdraw.
Warning Signs Of A Pension Scam
Scammers will contact you out of the blue using a variety of ways. It may be a phone call, email, or direct message on social media. They will say they're a financial adviser, or pension specialist, or imitate a legitimate government agency. They can also advertise online through Google AdWords or expats' articles related to retiring abroad.
The main warning signs listed by The Pensions Regulator are:
Phrases like 'pension liberation', 'loan', 'loophole', 'savings advance', 'one-off investment', 'cashback'
Guarantees they can get better returns on pension savings
Help to release cash from a pension before the age of 55, with no mention of the tax bill that can arise
High-pressure sales tactics – time-limited offers to get the best deal; using couriers to send documents, who wait until they're signed
Unusual high-risk investments, like property, renewable energy bonds and forestry, many of which tend to be overseas, making it difficult to check ownership or even whether the investment exists
Complicated investment structures
Fixed-term pension investments which often mean people do not realise something is wrong for several years
Many offshore pension scammers will also offer free pension reviews. Pension scammers are skillful and professional in their approach. They deliberately mimic those companies and organisations that you trust. Making sure you are aware of the key signs can help you spot them.
How To Avoid Pension Scams?
The FCA has identified four simple steps to protect yourself from pension scammers.
01 Reject Unexpected Offers
Any company that contacts you out of the blue is most likely a scam. Free pension reviews are a red flag and something to be wary of.
02 Check The Company You Are Dealing With
Do your due diligence on the financial adviser and the products they are recommending.
Whilst this is more difficult for an expat residing out of the UK as you cannot receive advice from an FCA-authorised adviser. Any advisory firm you work with should be regulated in your country of residence. You can check this accordingly whether you reside in Europe, the US, or other parts of the world.
03 Don't Be Rushed Or Pressured Into Anything
Take your time to check everything that has been recommended to you. Do not worry about missing out on a 'great deal' Be wary of anything that sounds too good to be true or offers guaranteed returns.
04 Get Impartial Information And Advice
Several government organisations provide free and impartial advice. They include Pension Wise, a service from MoneyHelper, and FCA ScamSmart.
You can also speak to a regulated financial adviser. Be sure you check they are regulated to provide advice in your jurisdiction.
How To Report A Pension Scam Or Fraud?
If you suspect a pension scam you can report it to:
Directly to The FCA or, if you are in the middle of a transfer contact your provider immediately and request to cancel the transfer.
Regulated Expat Financial Advice
The Wealth Genesis is a cross-border pension specialist servicing clients globally. We provide fully regulated advice throughout the US, Europe, and worldwide. All our advisers are qualified to the highest industry standards. All Wealth Genesis pension solutions are FCA regulated, and fully covered by the Financial Services Compensation Scheme, providing the greatest level of financial protection to our clients. To understand how we can help you, make an enquiry using the button below, or schedule a call using our calendar at the bottom of this page.
