Britons are being warned to be vigilant against pension scams that promise to help them avoid upcoming changes to inheritance tax (IHT) rules. Fraudsters are exploiting confusion and anxiety over the new regulations by offering a 'safe haven' for savings pots, often through unsolicited calls, emails, or messages.
How the Scam Works
The caller pitches a seemingly 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 system. From April next year, any money left in a defined contribution pension—which includes most workplace and all private pensions—after your death will be pulled into the IHT net. This forthcoming change has caused some anxiety, making the offer sound promising. However, the new scheme does not exist; it has been fabricated by criminals aiming to exploit people's concerns.
Standard Life, one of the UK's largest pension providers, has warned that such scams will become more common before the changes take effect in April 2027. Although the new rules will not affect everyone—the basic tax-free threshold for an estate is £325,000—fraudsters will play on any confusion 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.
What the Scams Look Like
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 on how 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."
What to Do
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, 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 that you can use to check whether a company is authorised. If you want to make changes to your pension, you may want to talk to a regulated financial adviser. The government-backed MoneyHelper service can help find one.
"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 that a scam is happening, you should report it to Report Fraud.
