TPR launches three-year strategy to tackle pension scams

The Pensions Regulator (TPR), which protects workplace pensions in the UK, has launched a new three-year strategy to crack down on pension scams¹. TPR says these scams currently pose a greater risk because people struggling financially could be more susceptible to fake promises of early pension access or higher investment returns¹.

The strategy will tackle pension scams by educating savers about the threat, encouraging higher standards and preventing practices that lead to saver harm, and fighting fraud through the prevention, disruption and punishment of criminality¹. Nicola Parish, executive director of frontline regulation, said:

TPR says it is primarily concerned with seven kinds of pension scams, which can often be seen in combination, plus one spin-off scam¹. They are investment fraud, where savers are persuaded to transfer or release pension funds into high-risk or non-existent investments such as overseas property, renewable energy bonds, forestry, storage units and parking; pension liberation, where early access is promised through bogus loans and loopholes; scam pension schemes and providers; clone firms; claims management companies; employer-related investment breaches; and high fees layered through complex business structures¹. The spin-off scam involves fraudsters approaching people who have already been scammed and offering to recover their money for an upfront fee, with charges described as tax, solicitor or administrative fees¹.

On the scale of the problem, Which? reports that victims can lose more than £50,000 on average, according to Action Fraud data from 2021, and that the think tank The Police Foundation has estimated £2.5tn of pension wealth in the UK is accessible to fraudsters¹. On pension liberation, the report states that accessing pension savings before age 55 normally attracts a 55% tax bill, that early access services often carry fees of up to 30% of the amount withdrawn, and that the only instances where a pension can be accessed before 55 are poor health or an occupation with a traditionally early retirement age, such as athletes¹. Pension freedom rules allow a tax-free lump sum from age 55, and holders of defined contribution pensions can withdraw up to 25% of the pot¹.

Why it matters for households

Anyone saving into a pension can be a victim, whatever their financial knowledge¹. The regulator's concern is that households under financial pressure are more likely to believe offers of early access or unusually high returns¹. Cold calling about pensions is illegal and is therefore a likely sign of a scam, and since the ban tactics have moved to social media¹. Where a firm is not authorised by the Financial Conduct Authority, savers may not have access to the Financial Ombudsman Service to complain and may not be protected by the Financial Services Compensation Scheme if money is lost¹. Concerns about a workplace pension scheme can be reported to TPR by emailing wb@tpr.gov.uk¹. Free guidance is available through Pension Wise, which offers pre-booked appointments to people over 50 with a personal or workplace pension¹. Our guide to pension scams sets out warning signs, transfer checks and where to get help.

What happens next

The strategy runs for three years from its launch¹. No further dated milestones have been reported.