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Upcoming changes to the inheritance tax (IHT) treatment of pensions could create new opportunities for fraudsters, as uncertainty pushes savers to reassess their retirement and estate planning decisions.
From April 2027, unused pension funds will be brought within the scope of inheritance tax. While this will not affect everyone, early indications suggest it is already influencing confidence and behaviour.
Standard Life research shows that one in five (22%) individuals feel less confident in pensions as a result of the changes, of which over half (54%) worry about the potential tax burden for beneficiaries.
For advisers, this shift presents a dual challenge: helping clients navigate complex planning decisions while protecting them from increasingly sophisticated scams.
Uncertainty creating scam opportunity
Periods of regulatory change often create the conditions scammers exploit most effectively. As individuals review how to structure and pass on their pension savings, fraudsters are likely to position themselves as offering timely or tax-efficient “solutions”.
These may include claims that pension funds can be moved into alternative arrangements that avoid inheritance tax. While such propositions may sound plausible – particularly when linked to genuine concerns – they can expose individuals to significant financial harm.
The scale of the risk is material. The average pension scam is estimated to cost victims £47,000, and losses are often irreversible.
Even where individuals are not directly affected by IHT changes, scammers may still create a false sense of urgency, persuading them to act quickly before fully understanding the implications.
No ‘one-size-fits-all’ solution
For clients with larger pension pots, IHT changes may legitimately prompt discussions about wealth transfer, gifting, or longer-term estate planning. However, these are complex decisions, and there is rarely a single or immediate solution.
Donna Walsh, head of master trust at Standard Life, cautions that individuals should be particularly wary of any approach presenting a “quick fix” or playing on fear.
As well as the risk of pension transfers following unsuitable or unregulated advice, people who can access their pension savings are at risk of being encouraged to withdraw to invest elsewhere, which may turn out to be a scam. It’s important that people don’t make decisions under pressure, without sufficient understanding of the long-term consequences.
Scams are becoming harder to detect
The evolving sophistication of scams adds another layer of risk. Fraudsters are increasingly using advanced tactics – including artificial intelligence and deepfake technology – to make communications appear credible.
Crucially, by the time a transfer or withdrawal request is flagged, individuals are often already convinced about their decision.
This makes traditional safeguards focused at the point of transaction less effective on their own.
Instead, providers, trustees and advisers need to prioritise earlier and more consistent engagement – ensuring clients understand the risks well before any potential scam materialises.
The role of advisers
This environment reinforces the importance of proactive client conversations.
Common warning signs remain consistent, but can be harder to spot in practice:
- Unexpected or unsolicited contact
- Promises of high or guaranteed returns
- Offers of early access to pension funds
- Time-limited or high-pressure sales tactics
- Convincing but fraudulent documentation or websites
Encouraging clients to pause, question and verify unfamiliar approaches is critical – particularly as scam techniques become more sophisticated. Advisers can also direct clients towards official websites such as the Financial Conduct Authority’s firm checker before taking any action and report any suspicious activity to Report Fraud.
A need for sustained industry focus
As the April 2027 deadline approaches, the industry will need to balance two priorities: supporting clients through technical tax changes while maintaining trust in the pensions system.
Clear communication, ongoing education, and cross-industry collaboration will be key to mitigating risk and preventing avoidable losses.
For advisers, the opportunity is to lead these conversations, helping clients make informed decisions while ensuring that legitimate planning discussions are not derailed by fraudulent activity.
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Phoenix Life Limited, trading as Standard Life, is registered in England and Wales (1016269) at 10 Brindleyplace, Birmingham, B1 2JB.
Phoenix Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
