Scams are a major problem around the world – and getting caught up in one can be devastating.

Last year, it was estimated that internationally, people lost more than US$1 trillion in 12 months to scammers.

Pension transfers can be a target for scammers who try to convince people to part with some or all of their hard-earned savings, under false pretenses. In some cases, people can end up not only losing money, but being hit with a tax bill, too.

Here’s what you need to know to avoid being caught.

What are the common types of pension transfer scams?

Scammers can approach their targets in many ways.

You might receive a call from someone with an offer to move your pension to an investment that claims to offer very high returns. 

You might be emailed about an “investment opportunity” for your pension that is sold to you with high-pressure tactics.  

Scammers might try to get your attention with a free “pension review” or even tell you that there is a special offer just for you, that has to be kept secret.

Scammers might offer to give you access to pension money that should be tied up for a while yet. You might be offered a system where you are charged high transfer fees and then offered a “rebate” as a sort of roundabout way to achieve an unauthorised withdrawal – this can attract a significant UK tax bill.

A scammer might talk about international investments in assets that might be hard to track.

Sometimes scammers set up fake investment businesses to receive transferred money. Scammers can be very sophisticated and set up websites and documents that look completely genuine. In some cases, people have been caught by pension transfer scams that went on for years before they were detected.

Spot the red flags

There are a few things that should raise alarm bells for you. 

Unsolicited offers: As with most investment opportunities, it usually pays to be wary of anything that’s offered to you as a cold call or an email out of the blue.

Too good to be true: If someone is offering you something that’s high return and low risk, and generally sounds a bit too good to be believable, that’s an immediate red flag.

Hard sell: If anyone is putting you under pressure, it’s a good sign that you should ask to pause the conversation. Any investment decision should be made with time to think and space to seek external advice.

Lack of contact details: Anyone you’re investing with should make it clear who they are and where they are based, and it should not be difficult to contact them. Anything else should raise questions. 

Lack of investment information: You should be able to easily access information about the assets that anyone is suggesting you put your money into. There should be a clear paper trail that proves ownership.

Protect yourself

You can help to protect yourself from scammers by ensuring that you’re only ever dealing with registered individuals and companies when it comes to pension transfer advice.

If you’re considering a move between the UK and New Zealand, pension transfer advisers should be registered with the Financial Conduct Authority (FCA) in the UK, or in NZ, be listed on the Financial Services Providers Register (FSPR), and work for a Financial Advice Provider that is licensed by the Financial Markets Authority.

Take some time to do research about anyone you’re considering working with, including looking for reviews and testimonials online.

You can check the FCA warning list for details of people the authority is aware of who are not allowed to operate.  The FMA also publishes warnings when it has concerns – but when scammers are operating outside the jurisdiction of these market watchdogs, they are limited in what they can do. Keeping your guard up in the first instance is likely your best defence.

Get advice

Transferring your pension internationally can make sense in many situations. But it’s important that it’s a decision made carefully, and with expert advice and assistance. If you’d like to talk about your options with a trusted professional, get in touch with us. We’re pension transfer experts and can help you work through the factors you may need to consider.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.