The caller pitches a great deal: shift the money saved in your pension and reinvest it in an overseas scheme where it can avoid being caught under next year's changes to the UK's inheritance tax (IHT) system. Sounds promising, doesn't it? Too bad the scheme doesn't exist - it's been fabricated by criminals hoping to exploit your perfectly reasonable anxiety.
From April next year, any money left in a defined contribution pension after your death - that's most workplace and all private pensions - will be pulled into the IHT net. Standard Life, one of the UK's largest pension providers, has warned that scams like this will become more common before the changes in April 2027.
Although the new rules won't affect everyone - the basic tax-free threshold for an estate is £325,000 - fraudsters will play on any confusion to try to convince people to move their money out of their pension, says Donna Walsh from Standard Life. "With these changes, people become uncertain and a little bit confused around what they can do, what will and will not happen. And that's exactly the type of conditions that scammers are set to exploit," she adds.
The scams often start with emails, calls or messages that come out of the blue. They might offer a free review of your pension or access to a scheme, or investment, with high returns, often located overseas. Common phrases used by scammers include "pension liberation", "loan", "loophole", "savings advance", "one-off investment" and "cashback", according to The Pensions Regulator. The criminals often apply pressure by saying you have a limited amount of time to accept the offer.
When someone agrees to transfer their money, the scammers will often coach them to answer questions that the pension provider might have about why they are moving their funds. "The provider asks those questions to try to protect the saver, but the scammer is then coaching them on how to get through those," says Walsh. "Our teams are trained to identify that."
Take care if you are called on the phone. Cold calling about pensions is illegal, so treat any unsolicited approaches with suspicion. As with all scams, the fraudsters want you to act impulsively and alone - so don't make any rash decisions and seek a second opinion. The Financial Conduct Authority has an online tool to check whether a company is authorised, and the government-backed MoneyHelper service can help find a regulated financial adviser.
"Those with larger pots may be thinking about how best to pass on wealth, particularly where pensions could face inheritance tax and then income tax for beneficiaries," says Mike Ambery of Standard Life. "For some, that might involve longer‑term planning or decisions about gifting, but there's rarely a one‑size‑fits‑all answer. What's important is not to be rushed into action - especially if someone is pushing a 'quick fix', or playing on fear."
If you think a scam is happening, report it to Report Fraud.