Pension changes – watch out for the fraudsters! - Pensions - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Pension changes – watch out for the fraudsters!

Pension changes – watch out for the fraudsters!

Category: Pensions

Updated: 07/04/2015
First Published: 31/03/2015

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

There's now less than a week to go until the new pension reforms come into effect, but what does this mean for you? Well, while the changes herald new freedoms in the pensions landscape, they've also increased the risk of scams.

What do the changes mean?

  • If you're aged 55 and over, you now have more flexibility when it comes to accessing your pension savings. You can still take 25% of your whole pension pot tax-free, but there are additional options when it comes to the remaining 75%.
  • Traditionally, you would have used the rest to buy an annuity, but this is no longer the go-to option. You can still take an annuity should you wish, but you can also leave the money invested and opt for a drawdown arrangement, or you can take the full amount as cash (remember that any money taken from the remaining 75% is taxable).

"This all sounds good, but pensioners must be on their guard, because this freedom is going to excite fraudsters who want to get their hands on your cash," said Rachel Springall, finance expert at Moneyfacts.

What do pensioners need to look out for?

Fraudsters are always on the lookout for ways to trick you out of your hard-earned savings, and the new freedoms unfortunately give them plenty of opportunities to do just that. "In particular, retirees may get mail or a phone call about how to invest their pension cash, but there's every possibility that this will be a scam," said Rachel.

"If in doubt, you can check to see whether this is the case by using the new ScamSmart Campaign provided by the Financial Conduct Authority (FCA). You can also get in contact with an independent adviser who will be able to identify whether the proposed investment is authentic."

So, if pensioners do get contacted out of the blue, what should they do?

  • Reject cold calls – just hang up. You could also think about registering for the Telephone Preference Service (TPS) by calling 0845 070 0707, but keep in mind this won't stop all cold callers.
  • Emails – don't believe everything you read. Unexpected emails are usually sent by firms that are not authorised or regulated. They may offer 'too good to be true' returns, so if you receive any emails like this, search for the firm online at
  • Post – throw it away! Junk mail is typically from unregulated firms, too, and you should be especially cautious of post advertising 'time-limited offers'. You can register for the mail preference service to stop being inundated with this kind of junk mail.

What if individuals get involved with these scamming firms but don't realise until it's too late?

Unfortunately, there's always the chance that you won't realise you're a victim until things have gone too far. If you think you're being targeted by scammers then call The Pensions Advisory Service on 0300 123 1047, or if you've accepted an offer, call Action Fraud immediately on 0300 123 2040.

Many changes are coming into place on 6 April, so read up on it now!

It isn't just the reforms on how you can access your pension that are coming into force – there's a whole lot more to be aware of! These additional changes include how you can pass your pot on to your loved ones, tax relief on additional contributions after taking money from your pension, as well as changes to the state pension. There are even proposals afoot that could allow you to cash in your existing annuity, but seek advice if you're considering this.

The website should be the first port of call for anyone approaching retirement age, as it'll give you a thorough overview of the options available. It also has links to many of the websites mentioned above, with telephone numbers you can call. Of course, here at Moneyfacts we'll keep you up to date, too, and make sure to check out our guide on the pension freedoms so you fully understand the risks. Above all, be on your guard, and hopefully you won't be a victim of opportunistic fraudsters.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.