What should I look for in a pension transfer adviser to avoid being scammed?

Falling victim to a pension transfer scam could result in your retirement dreams being shattered.

Many people assume they would be able to spot a scam from a mile off, but the tactics used by scammers are becoming more sophisticated all the time.

A recent survey by XPS Pensions Group found the proportion of Defined Benefit (DB) pension transfers showing at least one sign of being a potential scam reached a record high of 64% in November 2020.

For anyone considering transferring their pension, the data makes for alarming reading. However, there are steps you can take to protect yourself from scammers.

Here are four things you should look for when choosing a pension transfer adviser.

1. The firm must be registered with the FCA

Anyone can make themselves out to be a pension transfer adviser. They might sound knowledgeable and have a professional-looking website, but this doesn’t mean they should be trusted or that they’re authorised to give advice.

You should always check that the firm is authorised by the Financial Conduct Authority (FCA). You can do this by visiting the FCA Register, which will also show which activities the firm has permissions for.

Some firms produce ‘copycat’ websites where they pretend to be a genuine FCA-authorised firm. If you’re thinking about contacting a financial adviser, use the contact details on the FCA Register and not the details on the adviser’s website.

Never supply your pension or banking details through a website, no matter how official it may seem.

2. A genuine adviser won’t contact you out of the blue

If someone calls you out of the blue about your pension, it’s extremely unlikely that they’re an authorised pension transfer specialist. They’re probably a fraudster, so you should immediately hang up and alert the Information Commissioner’s Office.

Any unsolicited offers you receive via email or text should simply be ignored. Pension cold-calling has been banned, so you shouldn’t be contacted by a firm about your pension unless you’ve asked them to.

If the offer is very tempting, you might find it difficult to refuse. However, anything that promises higher returns, uses complicated structures, or puts money in unusual or overseas investments is likely to be a scam. If it seems too good to be true, then it probably is.

You should be very wary if the firm uses words like ‘pension liberation’, ‘loophole’, ‘free pension review’ or ‘one-off investment’.

3. A reputable pension transfer specialist won’t rush you

A common tactic used by scammers is to pressurise people into transferring their pension by setting time-limited offers or deadlines.

A trustworthy pension transfer specialist will never rush or pressurise you into making a decision. Transferring a DB pension is a potentially life-changing decision and, according to the Pensions Regulator and the FCA, it will typically be in someone’s best interests to keep their DB pension.

A reputable adviser will offer unlimited, face-to-face meetings in which they get to know you properly and ensure the transfer decision is fully informed. They’ll find out about your financial circumstances and aims, your priorities and spending plans in retirement, your health, and your other assets.

They will also check that you’ve fully understood the advice you’ve received and have a firm grasp of the risks of giving up a guaranteed income.

4. Check the adviser specialises in DB pension transfers

Once you’ve ascertained that the firm in question is legitimate, there are further steps to take to ensure they’re able to provide high-quality pension transfer advice. Remember, transferring a DB pension could be one of the biggest financial decisions you ever make.

The FCA Register doesn’t show whether a financial adviser is qualified to give advice in the specific area of DB pension transfers. Even if an adviser describes themselves as a specialist, this doesn’t necessarily mean they are.

Some of the ways to ensure the adviser is a reputable pension transfer specialist include:

• Insist on a face-to-face meeting
• Question their level of knowledge
• Speak with several advisers to compare their service and experience
• Read client testimonials and online reviews
• Seek word-of-mouth recommendations from friends or professional connections
• Check whether the firm has an independent compliance regime.

Don’t just opt for the cheapest adviser. Your pension could be one of, if not the, most expensive assets you own, so putting price over service could prove very costly in the long run.

A reputable pension transfer specialist will hold the Pension Transfer Gold Standard, which shows they adhere to strict standards when helping clients understand and obtain appropriate financial advice. They might also be recognised by their peers or governing bodies for the work they have carried out as a financial adviser.

Please note: Transferring out of a final salary scheme is unlikely to be in the best interests of most people.

Get in touch

At Palantir Financial Planning, we specialise in providing advice on DB pension transfers.

We’ll offer you unlimited meetings so that we can form a complete picture of your financial needs and goals. As members of the Pension Transfer Gold Standard, we’ll go beyond the minimum requirements when giving you financial advice.

Eamonn Prendergast, our Director and Pension Transfer Specialist, has the latest pension advice qualification from the Chartered Insurance Institute (CII AF7) as well as a qualification in retirement income planning (CII AF8).

Eamonn has also been shortlisted as a finalist for two prestigious financial awards: Adviser of the Year at the 2020 Professional Adviser awards and Retirement and Later Life Specialist of the Year at the 2020 Personal Finance Society Awards.

For more information, please email info@palantirfp.co.uk or call 020 8464 9012.