Pension scams in the UK: Evidence review

In 2021, reports of pension scams increased by 45%¹, and fraudsters stole over £2m from people in the UK in just six months².

This is likely to be a significant underestimate of financial losses, considering the Financial Conduct Authority (FCA) estimates that less than 1 in 5 instances of scams are reported. However, there is little rigorous evidence on what governments and the industry can do to reduce pension savers’ susceptibility to fraud.

This report presents the findings from a review of the evidence on the scale of pension scams in the UK, the impact on those affected, types of scam and tactics used by scammers, key risk factors and current trends. It also recommends actionable and evidence-based strategies and interventions that the Money and Pension Service (MaPS) and other stakeholders can adopt to lower the risks of scams and offer better support to those affected.

Key findings:

• Significant methodological challenges remain in the estimation of the scale of the problem in the UK
• The types of scams and the tactics are often very similar to investment scams more generally
• The financial and emotional cost of pension scams is high. The impact of scams goes beyond the financial loss, potentially leading to a loss of confidence and trust, detrimental health outcomes and breakdown of relationships with family and friends.
• Scams can happen to anyone. Once an individual has been targeted, there is a significant risk of re-targeting.
• MaPS as well as other organisations in the UK working to prevent pension scams and supporting those affected – such as pension providers – have at their disposal a range of touchpoints which lend themselves to interventions informed by the evidence presented in this review. Combined with already existing approaches, they can provide strong protection against scams.

Who is this report for?

We hope these findings will be useful for:

• policymakers
• pension providers
• any stakeholders interested in how to best prevent pension scams and support those that have been affected.

About the Financial Capability Lab

This project was part of the Financial Capability Lab, a programme funded and overseen by the Money and Pensions Service and implemented by the Behavioural Insights Team. The lab is a multi-year programme to develop and test innovative ideas to improve financial wellbeing and demonstrate paths to scale.

Sources

1. Action Fraud, 2021
2. FCA, 2021