Pension Liberation Fraud

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To liberate your pension sounds to many people like a good thing but, in the pensions world, pension liberation is normally linked to fraud and accessing your pension benefits before the age 55.
Pension liberation fraud (also commonly referred to as 'pension scams') can occur when you try to transfer your pension benefits to an unregulated scheme before the age of 55. Organisations offering these opportunities frequently refer to them as ‘Pension loans’ and offer cash incentives to sign over their pension benefits.
If you are suffering from ill health it is possible to access funds before age 55 from your current pension scheme. But for the majority, promises of early cash will be bogus and are likely to result in serious tax consequences. If you access your pension benefits before the age of 55, HMRC will consider this as an unauthorised payment.
Unauthorised payments are subject to high tax charges by HMRC, which you cannot reclaim. These are at least 55% and can be as high as 70% of the pension pot.
Pension Liberation becomes Pensions Liberation Fraud, when you are not informed of the potential tax consequences involved and when some or all of your money is unable to be located.
If you are a victim of pension liberation fraud, in addition to a high tax charge you will also have fees deducted from your pension for the transfer. These fees are unlikely to be recovered and can be 20% or more of your pension savings.


Warning signs

  • Being approached out of the blue over the phone or via text message.
  • Pushy advisers, often unregulated, who claim to be able to help you access your pension before age 55.
  • Companies that offer a 'loan', 'saving advance' or 'cashback' from your pension.
  • Any reference to 'loopholes', overseas investments, creative or new investment techniques.
  • The Pensions Regulator has worked with other agencies, including ourselves, to produce information, carrying distinctive scorpion imagery, illustrating the threat to your pension if you are taken in by such offers.
  • A detailed information leaflet for members of pension schemes looking to understand the consequences of these offers can be viewed here.
  • Be alert to offers like this and if in any doubt, take advice from a registered independent financial adviser. If you think you may have been made an offer, contact Action Fraud on 0300 123 2040.
  • If it sounds too good to be true, then it normally is.

How to avoid pension liberation fraud

There are a number of things you can do to ensure you do not fall victim.
  • Make sure that anyone giving you financial advice is approved and regulated by the Financial Conduct Authority (FCA). You can check if an adviser is approved through the FCA register at before you agree to anything.
  • You should ask the scheme that you are transferring from to check the new schemes HMRC registration - they can make sure if it is a legitimate scheme. 
  • Never be rushed into making a decision. If it sounds too good to be true, it probably is.
  • If you have any concerns about the offer that has been to you, you can ring The Pensions Advisory Sevice helpline 0300 123 1047
  • Don’t proceed unless you are absolutely certain your money will be safe, because once you transfer, it’s too late.
  • If you suspect you might have already been targeted by fraudsters you should contact Action Fraud on 0300 123 2040.
To find out more, click here to read the Pensions Regulator member leaflet which explains more detail on how to spot potential scams, what to do if you suspect a scam and who to contact.