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Standard Life warns of increased pension scam risk as IHT changes loom

Donna Walsh said clear communication, ongoing education and industry collaboration are vital as the inheritance tax changes approach. 

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Standard Life warns of increased pension scam risk as IHT changes loom
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Standard Life has warned of a higher risk of pension scams as changes to inheritance tax (IHT) rules are set to bring unused pensions into scope next year. 

The provider said savers are already worried about how the changes might affect their retirement pots and the money they leave behind. 

Donna Walsh, head of master trust at Standard Life, said: “With less than a year to go until unused pensions are brought into the inheritance tax regime, many savers will understandably be reassessing how their retirement savings are structured and passed on. 

“Our research shows this is already driving concern with one in five (22%) saying they have less confidence in pensions as a result of these changes, of which over half (54%) are worried that their beneficiaries could face higher inheritance tax when they die as a result. 

“However, periods of heightened uncertainty can also make individuals more vulnerable to scams, particularly where decisions are rushed or poorly informed.”

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Walsh said scammers may use this time to target savers, offering so-called ‘solutions’ to avoid IHT and urging people to move pension savings to new schemes that claim to be IHT-free. 

She added that fraudsters could try to convince people to act quickly, even if the changes won’t impact everyone and many savers’ pots won’t be big enough to face inheritance tax. 

Walsh noted scammers may promise ways to minimise inheritance tax, including moving pensions into structures that claim to avoid it, but these schemes can cause serious financial harm. 

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She said the average pension scam costs victims £47,000, and often the losses cannot be recovered.

Walsh added: “Those with larger pots may be thinking about how best to pass on wealth, particularly where pensions could face inheritance tax and then income tax for beneficiaries. 

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“For some, that might involve longer term planning or decisions about gifting, but there’s rarely a one size fits all answer. 

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“What’s important is not being rushed into action – especially if someone is pushing a ‘quick fix’ or playing on fear.”

Walsh said early intervention is key, as scams are becoming more sophisticated and member enquiries are expected to rise before April 2027. 

She said: “The tactics employed by scammers to part people from their pension savings are becoming increasingly sophisticated, and as member enquiries increase ahead of April 2027, providers and trustees need to ensure that protections against such activities keep pace. 

“Pension scams are becoming increasingly sophisticated and can affect people whether they are building up their pension or starting to access it. 

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“There’s also a risk of fraudsters making greater use of artificial intelligence and deepfake tactics to make approaches look and sound more convincing.”

She added: “By the time a suspicious transfer reaches a provider, the customer is often already convinced they are making the right choice and can be difficult to dissuade. 

“That’s why early, consistent intervention is so important. 

“Across the industry, we need to ensure that our systems and due diligence keep pace with scam tactics and that savers are educated about the risks and warning signs throughout their entire savings journey, rather than relying solely on checks at the point of transfer.”

Walsh said clear communication, ongoing education and industry collaboration are vital as the inheritance tax changes approach. 

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Walsh said: “As we approach significant changes to how pensions are treated for inheritance tax purposes, clear communication, ongoing education and strong cross-industry collaboration remains critical to reducing scam risk and maintaining confidence in the pensions system.”

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