Coupled with the disturbing statistic that 25% of adults suffer a diagnosable mental health problem each year, this is a significant issue.

Fraud of all kinds costs the UK around £300bn a year, while mental health costs the economy around £117bn. The human costs are on top.

Combined, the cost of these two issues is over £400bn a year – that’s 13.5% of our entire GDP (forecast to be £2.96 trillion for 2025). It is staggering to think that two avoidable problems can be related.

No one has carried out such an analysis, but anecdotally, the loss of pension savings to fraud is devastating both financially and mentally. It is safe to say that the relationship is causal.

I recently carried out a small-scale informal study of pension scam victims, analysing their impact statements and asking them to provide details of their NHS medications and treatments.

What was scarily consistent within my small study was the double whammy caused by the loss of pension to fraud coupled with HMRC’s “awful but lawful” treatment of scam victims.

GPs and mental health professionals consistently recorded scam victim patients as suffering from stress, anxiety, insomnia, depression, high blood pressure, and heart problems. They consistently prescribed antidepressants, hypertension drugs and cognitive behavioural therapy as well as issuing long term sick notes. The drugs cost in my small study alone is around £30,000 per person per year. This means that the cost to the UK of the mental health damage suffered by 500 historical pensions scam victims being taxed as if they are criminals is at least £225,000,000. That’s nearly quarter of a billion pounds in public costs so that HMRC can collect around £20million in tax from a small number of historical pension scam victims. This is madness and utterly avoidable, so why isn’t something being done about it? Mental health professionals have said that only a fair resolution of the fraud and its tax consequences will end the mental harm.

I regularly speak to pension scam and investment fraud victims and can see for myself the increase in stress when some new message, press story or letter from HMRC reaches the victim networks. And yes, victims form networks because no one in authority is helping them. The latest was the news that HMRC was about to issue its final demands for pension tax charges at the end of 2025, and this saw a huge spike in panic and misinformation. In fact, even after 15 years, HMRC has not yet been able to work out the tax assessments – the calculations are so complicated that even professionals struggle to get their heads around it. However, despite years of appealing for fairness, HMRC will not give an inch.

I certainly find it appalling that an individual can be taxed on a “loan” they were offered by managers of an HMRC registered pension scheme and taxed on a “loan” their scheme made to someone else. This change of approach came in with a Tax Tribunal decision in 2023, which decided that HMRC could tax on this basis, and they have decided to do so. This tribunal was more than a decade after the actual scams took place. To add insult to injury, the “loans” have been repaid, so there has been no gain to the individual victims. This means that people have lost their life savings, gained nothing yet must pay up to 55% of a meaningless amount plus cumulative interest of up to another 50% on top. The schemes that carried out these loans are also taxed, which means that HMRC is taxing the same fraud three times.

Sadly, the pension scam victims are not alone. Readers may have seen the recent BBC documentary on the V11 footballers who were advised into fraudulent investment schemes and lost their life savings. Like the pension fraud victims, these sporting heroes were tricked and suffer the consequences every single day. HMRC has also been pursuing these victims for 55% tax on money they never had and the mental toll on them is severe. What a sorry state where we allow our heroes and key workers to be hounded into crisis and a real risk of suicide by an unfair tax system.

To add insult to injury, those pension scam victims who paid their tax charges early to avoid the pain are now facing a second charge because of the 2023 tribunal. So much for the HMRC tagline “Tax shouldn’t be taxing.”

These victims may be your former scheme members. You paid the transfers to the scam schemes in 2011. If you think this tax and mental suffering is unfair, you can do something about it – a small number of pro bono advocates is not enough. Please stand up and be part of our campaign for justice here.

Margaret Snowdon, Chair – PSIG