The Labour government’s first financial statement controversially included pensions in inheritance tax calculations.
The announcement sparked public outcry, as many see them as a protected nest egg for retirement rather than a taxable estate.
Now fraud specialists are warning savers to be extra vigilant against criminals promising exaggerated returns or offering to “look after” their pensions.
Under the new rules, retirement savings left to beneficiaries will now be counted as part of an individual’s estate and therefore subject to inheritance tax.
This policy change has led to confusion and concerns among retirees and their families, creating an environment ripe for exploitation.
Scammers are seizing the opportunity to target vulnerable individuals, offering schemes that claim to “shield” pensions from the new tax.
Jessica Hampson, CEO of CEL Solicitors, a legal firm specialising in fraud and consumer rights, stressed the importance of vigilance.
She said: “Fraudsters thrive on fear and uncertainty, and the recent pension tax changes have created the perfect storm.
“We’re already seeing an uptick in scams where criminals promise unrealistically high returns or claim they can safeguard pensions from tax liabilities. These promises are almost always too good to be true.”
The tactics used by scammers often involve cold calls, unsolicited emails, or social media messages that offer seemingly legitimate investment opportunities.
Once victims transfer their pension funds, the fraudsters either vanish with the money or place it in high-risk, unsuitable investments, leaving the victim out of pocket.
According to Action Fraud, the UK’s national reporting centre for fraud, there were 559 reports of pension fraud in 2023 and £17,750,635 lost, with an average loss of £46,959 per victim.
Many of those targeted are retirees who are relying on their pensions to fund their later years.
Mrs Hampson advises anyone approached with offers to move their pension to conduct thorough checks before making any decisions.
She added: “Speak to a trusted financial advisor and double-check the credentials of anyone claiming to represent a company.
“Don’t feel pressured into making quick decisions, and always be wary of schemes promising better-than-market returns.
“Legitimate investments rarely come with guarantees of high profits.”
The Treasury has defended the new inheritance tax policy, arguing it ensures a fairer tax system as pension pots have grown significantly in value due to decades of tax relief.
However, critics argue the measure penalises those who worked hard to build their retirement savings.
