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An investment or pension scam is when you are offered a fake opportunity to make a profit after handing your money, savings or investments to another person. Often this third party won’t make an investment on your behalf as they simply take the money. Other scammers do make investments, but they often take huge commissions or charges upfront. To offset the commissions and charges the scammer will place your remaining money in very high-risk and unregulated investments to generate a return. This usually leads significant, and in some cases, total loss of the original investment.

If you are approached, or see advertised, any of the following features applying to an investment, you should give serious consideration about whether this investment is right for you.

• Large and guaranteed returns- The offer of high returns and guarantees are made solely to get you to hand over your money.

• No risk to the money you invested- Unless it is a cash-based investment, your investment is very likely to be at risk and you might get back substantially less than the value of your initial investment.

• Unsolicited approaches such as cold calling and offers of a free pensions review- The government has recently introduced a ban on cold calling about pensions. If you receive an unsolicited call about your pension, it is almost certainly a scam.

• Releasing Cash from a pension before age 55- If you take money out of your pension before age 55 HMRC will make you pay punitive penalties and there is no way around this, despite what scammers tell you.

• Pressure to invest- The investment might be sold to you as only available for a set time, after which no new investment will be accepted.

• Non traditional investments- overseas property, carbon credits, parking lots, storage units, precious metals, cryptocurrencies and forestry investments are often used in investment and pension scams. Any mention of these investments should raise suspicion and trigger further investigation.

Talk to an IFA – We regularly come across investment and pensions scams and can quickly spot schemes that would put your money at risk. 

Get impartial information from government sources such as The Pensions Advisory Service, Pensions Wise, Money Advice Service or the FCA’s ScamSmart website all of which have information on investment and pension scams.

Be wary when researching investment opportunities. The scammers are getting better at looking like legitimate businesses and they often have professional looking websites with numerous fake reviews and testimonials.

Check the FCA register and if the adviser or firm contacting you is not listed there will be no protection from the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS). This means that you would be very unlikely to get your money back if anything was to go wrong.

Don’t just make an investment because it has been recommended by a family member, trusted friend, or knowledgeable colleague. As advisers we often find that people are happy to talk about their investments after making big gains, but they are less forthcoming about discussing their choices which have led to large losses.

You’ve heard this one before, but if it is too good to be true… well, you know the rest.