13 Mar 2024

'A cold call scam drained £96,000 from my pension savings'

Which? helps a reader who fell victim to a complex pension scam

A phone call out of the blue in 2014 caught Davina Frost (pictured) at the worst possible moment. She had just been made redundant and was in poor health.

It was the start of a chain of events that saw her lose her pension savings.

Read on to find out how Davina was targeted by a complex pension scam, and for advice on spotting the warning signs of pension fraud.

The origins of the scam

Davina was called by Portia Financial, an unregulated introducer. It suggested that she could end up with a ‘more substantial, easier to manage pension’ and put her in touch with Servatus Ltd, a regulated financial adviser in Dublin.

After carrying out a ‘pension review’, the adviser from Servatus persuaded her to transfer her £96,000 defined benefit (DB) pension into a qualifying recognised overseas pension scheme (QROPs).

Around half of the money (£51,000) was invested in a company called German Property Group (formerly Dolphin Capital and Dolphin Trust).

The other half was invested in a mix of diversified mutual funds managed by JP Morgan and Jupiter, via the SEB Investment Platform.

A pyramid scheme

The German Property Group (GPG), which promised to use investors’ money to redevelop listed buildings in Germany and sell them as homes, turned out to be a pyramid scheme.

The firm went into liquidation in July 2020, owing around £1bn to investors, who were left with little chance of getting any money back.

Davina told Which? Money in 2021: ‘I wouldn’t have put money into something I thought was risky. The experience has left me feeling humiliated, depressed and angry.’

Sign up for scam alerts

Our emails will alert you to scams doing the rounds, and provide practical advice to keep you one step ahead of fraudsters.

An uphill battle to recover funds

When Davina contacted us in 2021, she assumed all of her money was lost.

There was a credit note valued at £0 for the German Property Group, and STM Malta (the QROPs provider) had said repatriation of the remaining funds or partial withdrawals were not allowed. Putting money into a QROPs is rarely a good idea unless you’re actually moving overseas.

Only after Which? Money directly appealed to the CEO of STM Malta in 2022 was it agreed the remaining funds could be released without penalty. It then took 15 months for £39,000 of Davina’s money to be transferred back to the UK.

Davina said: ‘I’m delighted to get back a good chunk of my original pension savings. This is entirely due to the determination of Which? Money’s Paul Davies. Without his persistence and powers of negotiation, this couldn’t have happened.’

Matthew Harrison, an adviser from Tower House WM (a partner practice of St James’s Place), helped to get the remaining money repatriated and reduced his usual fees. He said: ‘I’m so pleased for Davina and delighted we’ve helped her turn a nightmare situation into a position where there is some confidence and optimism for the future.’

The story isn’t over yet: the initial transfer is being looked at by the The Pensions Ombudsman and it’s possible (although unlikely) that a further £51,000 could be recovered.

Safeguarding against pension scams

Since January 2019 it has been illegal to cold call anyone in relation to their pension savings. But this hasn’t stopped fraudsters.

In 2021, the UK government introduced extra safeguards around pension transfers to reduce the risk of scams.

Overseas investments being included in the new scheme is one of the most common reasons for an amber flag to be triggered. This will pause the transfer while the existing provider investigates.

A pension transfer will be stopped altogether if there is a red flag, which indicates a significant risk of a scam. This includes cases where an individual requests to transfer their pension as a result of a cold call.

Find out more: how to spot a pension scam

Pension scams: the signs to look out for

Pension cold calls are illegal. Any unsolicited calls could be from a scammer. The same goes for emails, text messages or visits. A legitimate company won’t call you out of the blue.
Being forced to make a quick decision is a warning sign. Paperwork sent to your door by courier for a signature to speed things up should ring alarm bells.
Beware promises of low risk/high returns. Fraudsters may promise high rates of return on your money, often including overseas investments. If it sounds too good to be true, it probably is.
Beware offers of a ‘free pension review’. Companies offering free reviews won’t be authorised. The investments pushed as part of a review will be dubious at best or an outright scam.
Avoid companies providing ‘help’ to release cash from your pension. You can only take money from your pension when you’re 55 or older except in certain cases, such as poor health. A tax bill of 55% might await if you withdraw money before the age of 55, even if you didn’t realise you’d breached tax rules.
Contact information is important. If you have little or nothing in the way of contact names, addresses or phone numbers for the company you're dealing with, it might be a scam.