Pension scams could become more common as people try to understand the inheritance tax changes due to affect some inherited pension funds from 6 April 2027. Where there is confusion or concern, scammers may try to use that uncertainty to target retirement savings.
For business owners, directors, sole traders and self-employed professionals, pensions can form an important part of long-term financial planning. That makes it worth taking extra care before acting on any unexpected advice or offer.
What is changing for inherited pensions?
From 6 April 2027, inherited pension funds will be subject to inheritance tax unless they are inherited by a spouse or civil partner.
This is a significant change, and it may lead some people to review their pension and estate planning. However, it may also create an opportunity for scammers.
Where people feel unsure about what the new rules mean, fraudsters may step in with offers that appear to provide a simple solution.
How scammers may use the IHT change
One possible scam involves offering a “safe haven” overseas for pension savings.
The offer may suggest that moving pension funds abroad will help protect them from inheritance tax. However, there are two major problems with this.
The first is a tax problem. For anyone who is a long-term resident in the UK, moving a pension fund overseas will not change the inheritance tax position. Worldwide assets, including overseas pension funds, are included as chargeable assets for UK inheritance tax purposes.
The second problem is more serious. Whether the suggested tax planning works or not may be irrelevant, because the fraudster’s real aim is to plunder the pension fund.
Why pension scams are becoming harder to spot
Pension scams are becoming more sophisticated.
Scammers may use artificial intelligence and deepfake technology to make their approach look or sound more convincing. This can make it harder to distinguish a genuine communication from a fraudulent one.
That is why it is important to treat unexpected messages, calls or emails about your pension with caution.
Warning signs to watch for
The first warning sign is usually unexpected contact.
Cold calling about pensions is illegal, so an unsolicited call, email or message should be treated with suspicion.
Scammers may also try to make the offer sound attractive by combining the supposed inheritance tax saving with promises of higher returns if the pension funds are moved.
They may then apply pressure by saying the offer is only available for a limited time.
That pressure is deliberate. A scammer wants their victim to act quickly, impulsively and alone. They do not want them to pause, ask questions or obtain professional advice.
Be cautious if someone tells you how to bypass checks
If you agree to transfer funds, a scammer may coach you on how to get around your pension provider’s safety rules.
For example, they may tell you what to say when asked why the funds are being moved.
This should be treated as a serious warning sign. Pension providers ask questions because they are trying to protect savers from fraud.
If someone encourages you to work around those checks, step back before going any further.
If it sounds too good to be true, take advice
The old saying remains useful here: if something sounds too good to be true, it usually is.
That does not mean every pension or inheritance tax planning conversation is suspicious. However, it does mean any unexpected approach should be treated carefully, especially where it involves overseas transfers, unusually high returns or pressure to act quickly.
For Scottish business owners and individuals planning for retirement, the safest approach is to take regulated advice before making any major pension decision.
You can also use the Financial Conduct Authority’s online tool to check whether a company is authorised.
What should you do if you are unsure?
If you receive an unexpected offer about moving your pension, do not rush into a decision.
Before taking action, consider:
- whether the approach came out of the blue
- whether the person or company is authorised
- whether the offer relies on pressure or urgency
- whether the promised return sounds unrealistic
- whether you are being encouraged to avoid your pension provider’s normal checks
- whether you have taken independent professional advice
Pensions are often built up over many years. Taking a little extra time to check the position can help protect both your savings and your wider financial plans. If you are concerned about how pension IHT changes may affect you, or you are unsure whether an approach is genuine, speak to AMMU before taking action.