How to avoid pension fraud

Hundreds of people were scammed out of their retirement savings last year with around £48,000 lost every day in 2024, as fraudsters continue to prey on older people.

There were a total of 519 reports of pension fraud in 2024 with a staggering £17,567,249 taken from pension savers last year, according to new data from Action Fraud.

This represents an average loss of £33,848 per victim, though some will have lost more than others.

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Gaucho Rasmussen, executive director of regulatory compliance at The Pensions Regulator, said: “These statistics are another alarming wake-up call and reveal the shocking reality of how much money is stolen from hardworking savers in just one year.

“Fraudsters are ruthless, using fake investment deals and impersonation scams to exploit vulnerabilities and get their hands on savers’ hard-earned pensions. We urge every saver to ‘stop, think and check’ to protect their pension as if their future depends on it – because it does.”

The millions of pounds lost to pension scams is just a fraction of the £1.17 billion that fraudsters stole from 3.31 million consumers in 2024.

Unfortunately, those who fall victim to these scams will have great difficulty getting their money back, so it is best to try to protect yourself and your pension from scammers.

We look at the common ways pension savers may be defrauded, and how to avoid them.

The most common pension scams

The two most prevalent ways that criminals targeted victims was through investment scam pressure tactics, as well as account takeovers through impersonation, according to Action Fraud’s analysis.

Investment Fraud

Investment fraud refers to scams where fraudsters convince people to invest in schemes or products that are either worthless or do not exist. Once the victim has sent the scammer their money, they will likely cease all communication with the victim.

This type of scam will often involve pressure tactics from the fraudster to try to rush the victim into sending over their money. They may stress that the investment opportunity is time-sensitive and try to rush the victim into “investing” on the spot.

Scammers usually get in contact with victims over the phone, but alternative methods of contact may be attempted. Some scammers also use AI ‘deepfakes’ that impersonate trusted business and financial leaders to defraud people.

Chief Superintendent Amanda Wolf, head of Action Fraud, said: “Feeling pressured into an investment opportunity on the spot is a sign of fraud – legitimate organisations will never make you feel this way. Approach any investing offer with caution and seek independent financial advice if you’re unsure.”

Account takeovers

Account takeovers refer to when a fraudster gains control of your account (bank, credit card, email, pension) and uses this access to take your money.

The scammers may claim a victim’s account needs to be taken over because their computer was infected with a virus which mined the account information, though passwords may also be obtained through impersonation or other social engineering techniques.

Wolf adds: “Avoid unsolicited phone calls about pensions, it could be a criminal trying to gather personal information to impersonate you and gain access to your pension scheme account, inevitably stealing your hard-earned cash.”

While the two methods listed above were the most common ways that pensioners were defrauded in 2024, other methods exist.

How to protect yourself and try avoid pension fraud

Make sure you have taken steps to protect yourself, to reduce the risk of losing your pension pot to fraudsters.

Action Fraud recommends pension savers secure their online pension accounts by using a unique and strong password and enabling two-factor verification for an extra level of security.

While this will help avoid account takeovers, strong passwords will do little to help stop investment scams, where criminals use social engineering to convince individuals to send over cash.

Action Fraud advises pension savers to always stop and think before they consider potential investment opportunities, as they may be fraudulent.

Pension savers should not be rushed into making an investment, and legitimate organisations will never pressure you to invest on the spot.

Action Fraud lists three telltale signs that something may be investment fraud:

• if there is pressure to invest
• downplayed risk of losing your money
• promised returns that sound too good to be true.

How to report suspected fraud

If you think you have been a victim of fraud, Action Fraud recommends you to report it to them on actionfraud.police.uk or by calling 0300 123 2040.

They add that if you have already made a payment, you should inform your bank or pension provider as soon as possible as this can help you prevent further losses.