Resources & Insights

Pension Scams and the Industry Response: A White Paper

By QROP Direct Editorial Team · Reviewed by an independent regulated pension specialist · Reviewed 2026-06-10

Pension Scams and the Industry Response: A White Paper

Executive Summary

Pension fraud is among the most damaging category of financial crime targeting UK individuals. Victims lose, on average, more than £50,000 per case — savings that took decades to accumulate and that cannot be replaced. UK expats are disproportionately targeted: geographic distance from the UK, unfamiliarity with local regulations, the complexity of cross-border pension arrangements, and the inherent vulnerabilities of expatriate social networks all make this population a high-value target for scammers.

This white paper provides a comprehensive analysis of the pension scam landscape — how scams are structured, who they target, what the regulatory and industry response has been, and what individuals must do to protect themselves.

This paper is for information purposes only and does not constitute financial, tax or legal advice.

1. The Scale of the Problem

Pension fraud statistics are difficult to capture accurately because many victims do not report their losses — from shame, a delayed recognition that they have been scammed, or a misunderstanding of the reporting routes. But the data that exists is alarming.

The FCA and The Pensions Regulator (TPR) estimate that pension scams have cost UK savers hundreds of millions of pounds per year. High-profile investigations have identified scam networks that processed hundreds of transfers, each involving tens to hundreds of thousands of pounds (Source: FCA, fca.org.uk, 2026).

The population most at risk includes:

• Expats, who are geographically isolated from UK financial norms and institutions, who face genuine complexity in managing their pensions from abroad, and who are exposed to overseas-based promoters who operate in jurisdictions with weaker consumer protection
• Those approaching or in early retirement (ages 55–65), who have accumulated significant pension wealth and are beginning to make active decisions about their savings
• Members of large public sector DB schemes (NHS, teachers, civil service), whose large CETV values make them high-value targets
• Those in financial difficulty, who are attracted to offers of early pension access or unusually high investment returns

2. How Pension Scams Work

2.1 Initial Contact

The vast majority of pension scams begin with unsolicited contact:

• Cold calls — despite the UK ban on pensions cold calling (introduced 2019), calls from overseas numbers and VoIP services continue. Expats are particularly accessible because they may not have the same caller ID recognition of suspicious UK numbers.
• Social media and online forums — expat Facebook groups, LinkedIn, and WhatsApp groups are actively targeted. Scammers pose as financial advisers, QROPS specialists, or fellow expats who have "found a great pension solution."
• In-person approaches — golf clubs, expat bars, church groups, and other expat gathering places in popular expat destinations (Spain, Portugal, UAE) are used by scammers to build social credibility before making a financial pitch.
• "Friend of a friend" referrals — scam networks pay commission to existing victims or recruited introducers to bring in new targets. The referral from a trusted social contact is far more effective than cold contact.

2.2 The Pitch

Once contact is established, scammers use several consistent narratives:

The free pension review: A seemingly helpful offer to review the member's UK pension at no cost. The review is a fact-gathering exercise to identify pension values and personal circumstances. The subsequent "advice" is a recommendation to transfer.

The high-return investment: An investment opportunity offering returns of 8–15% per year (far above market rates) into an asset class that is presented as exclusive or institutional — overseas property developments, carbon credits, storage units, litigation finance. These returns are either fabricated or relate to Ponzi-style arrangements where early investors are paid from later investors' funds.

The "locked money" narrative: Framing the UK pension as "locked away" by UK restrictions, which can be "released" or "unlocked" through transfer to an overseas arrangement. This resonates particularly with expats who feel disconnected from UK institutions.

The urgency close: A time-limited opportunity — a "final few places" in an investment fund, a CETV guarantee expiring, a "closing window" before regulatory changes. Artificial urgency bypasses deliberate decision-making and prevents the target from seeking independent advice.

2.3 The Transfer

Having secured the target's agreement, the scammer assists them in initiating the transfer from the legitimate UK pension scheme to the fraudulent receiving scheme. This typically involves:

• Providing transfer forms and instructions
• Coaching the target on what to say to the ceding scheme (including how to deflect "safeguarding" questions)
• In some cases, impersonating the target or their adviser to the ceding scheme

Ceding schemes have implemented safeguarding checks — particularly following the introduction of statutory transfer rights and the "amber flag" / "red flag" system in November 2021. These checks require ceding schemes to pause transfers where certain risk factors are present and to provide members with guidance from MoneyHelper. However, sophisticated scammers have learned to coach targets to provide the "right" answers to these questions.

2.4 The Aftermath

Once the transfer is complete, the outcome varies:

• Investment fraud: The funds are placed in a fraudulent investment scheme that either pays nothing or pays an initial "return" to establish credibility before collapsing. The member may not realise they have been scammed for years.
• Pension liberation: The funds are accessed before minimum pension age — an unauthorised payment — triggering HMRC tax charges of up to 55%. The member pays the tax charge and also pays the promoter's fees, often losing 60–75% of the transfer value.
• Simple theft: The funds are simply misappropriated, with the receiving "pension scheme" disappearing entirely.

3. The Regulatory Response

3.1 Statutory Transfer Right Reform (2021)

The most significant legislative intervention was the amendment of statutory transfer rights under the Pension Schemes Act 2021. Previously, members had an absolute right to transfer to any scheme. From November 2021, ceding schemes can pause or block transfers where "red flags" or "amber flags" are present.

Amber flags (require referral to MoneyHelper guidance): - Unregulated investments - Incentives to transfer (cash-back, loans) - Overseas investments - High-risk or unregulated investment strategies

Red flags (allow the scheme to refuse the transfer): - The receiving scheme is not regulated appropriately - The receiving scheme is an occupational scheme but the member has no connection to the employer - HMRC concerns about the receiving scheme

This reform has materially reduced the ability of scammers to complete transfers from regulated schemes without the member at least being warned.

3.2 Cold Calling Ban

The ban on pensions cold calling, introduced in January 2019, prohibits unsolicited calls to individuals about their pension. The ban has reduced the volume of legitimate cold calls, but its effectiveness against overseas-based scammers operating through VoIP or overseas numbers is limited.

3.3 FCA ScamSmart and Joint Regulator Activity

The FCA runs the ScamSmart campaign — an ongoing consumer awareness initiative providing tools to check whether a firm is authorised and to identify pension scam warning signs. The joint FCA/TPR "Pension Scam Pledge" has secured commitments from pension providers and employers to implement consistent anti-scam measures.

The FCA's Financial Services Register allows anyone to check whether a firm is authorised and what activities it is authorised for. The FCA also maintains a warning list of firms they have identified as operating without authorisation.

4. Why Expats Are Particularly Vulnerable

Beyond the general population, expats face specific vulnerability factors:

Distance and unfamiliarity. Living abroad, expats lose the informal networks of friends, colleagues, and family who might warn them about a suspicious approach. They also become less familiar with current UK financial norms, making it harder to recognise what is legitimate.

Cross-border complexity. The genuine complexity of international pension planning creates an opening for scammers. When someone legitimately needs to understand QROPS, OTC, DTAs, and SIPP platforms, the difference between a genuine adviser and a scammer is not immediately obvious. Scammers exploit this complexity by presenting themselves as specialists.

Social network exploitation. Expat communities form strong social bonds quickly. Someone who has been in a destination for only six months may trust a fellow expat they met at a social event in a way they would not trust an equivalent stranger at home. Scam networks deliberately cultivate these trust relationships.

Regulatory arbitrage. Some scammers operate from jurisdictions with weak consumer protection laws, beyond the reach of UK regulators. Expats who engage with advisers in their country of residence rather than UK-regulated advisers may have fewer protections.

5. The Industry Response and Best Practice

5.1 Ceding Scheme Safeguarding

The implementation of the 2021 amber/red flag framework has been uneven across the industry. Larger workplace pension providers and major SIPP platforms have implemented comprehensive due diligence processes. Some smaller schemes have been slower to adopt consistent procedures.

Best practice for ceding schemes includes: - Mandatory MoneyHelper referral for all internationally directed transfers - Enhanced due diligence for QROPS transfers, including verification of the ROPS list status - Member contact before processing any transfer where risk factors are present - Training for administrators on scam indicators and coaching responses

5.2 Adviser Community

Independent regulated financial advisers have a critical role in scam prevention. A member who has access to a trusted independent adviser is significantly less likely to be scammed — the adviser can assess proposed receiving schemes and flag obvious red flags.

The pension scam pledge has engaged a substantial proportion of the adviser community. However, gaps remain: not all advisers are aware of the latest scam structures, and some "advisers" operating in expat communities are themselves scammers or unregulated introducers.

6. Protection: What Members Must Do

The following actions provide the strongest individual protection:

1. Never act on an unsolicited approach. Any contact about your pension that you did not initiate should be treated with extreme scepticism, regardless of how it is presented.

2. Check the FCA register before engaging any adviser or scheme. fca.org.uk/register. Confirm the specific permissions — "advising on pension transfers" and "operating a SIPP" are not the same as general FCA authorisation.

3. Check the HMRC ROPS list before any QROPS transfer. gov.uk. Do this on the day of transfer, not months earlier.

4. Use MoneyHelper. If you are asked about your pension by anyone, MoneyHelper (0800 011 3797, moneyhelper.org.uk) provides free, impartial guidance and can help identify whether an approach is legitimate.

5. Seek regulated, independent advice. An independent financial adviser who charges a fee (not commission) and holds the appropriate qualifications is the most effective protection against unsuitable transfers.

6. Slow down. Urgency is a scam tactic. Legitimate advisers do not create artificial deadlines. If you feel pressured to decide quickly, walk away.

7. Conclusion

Pension scam prevention is a collective responsibility — of regulators, scheme trustees, administrators, advisers, and individuals. The regulatory framework has improved materially since 2018, but motivated, well-funded criminal networks continue to adapt.

For UK expats, the most effective defence remains engagement with the legitimate regulated advice community. The alternative — making significant pension decisions without qualified guidance — is precisely the vulnerability that scammers exploit.