Beware the pension liberation front

22nd February 2013

Despite the best efforts of financial services regulators there are still quite a number of unscrupulous people operating “under the radar” to perpetrate scams on the unsuspecting or unwary.  So be careful if you are approached by someone offering to help you to unlock money that is tied up in your pension fund because they may be leading you into a fraudulent arrangement. This could result in your fund suffering punitive tax charges and high transaction fees.

Image courtesy of Éole, Flickr

The Pensions Regulator is so concerned about the volume of these scams that they have launched a campaign to publicise the risk, with a rather dramatic leaflet which you can view here. These scammers are likened to vicious scorpions – predators who stalk your pension. The new leaflet includes a number of examples of the tactics they employ, including:

  • Unsolicited calls
    Companies are increasingly targeting people in this way and there is evidence that they are succeeding in duping members of the public into transferring their funds toward rogue pension arrangements.
  • Targeting poor credit histories
    Just like most people’s home phone numbers, details of Bankruptcy Orders or County Court Judgements are in the public domain. Pension fraudsters will often target people who they know might be especially vulnerable and interested in short-term cash.
  • Using a courier
    If you are encouraged to speed up the transfer process this could be a warning sign. Always think carefully about making a pension transfer, take time to understand the financial and tax consequences and never, ever be rushed.

Many people have fallen for this type of fraud.  The “scammers” are often plausible and appear to be working as bonafide advisers.  It’s not uncommon for them to offer cash incentives to persuade people into taking action.

We recommend you are guided by one of life’s golden rules: if something looks too good to be true it probably is. Generally it is not possible to access funds from a pension before your 55th birthday.  Any attempt to do so can result in an unauthorised payment charge of 55%!

Do take some time to read the leaflet and make sure family, friends and colleagues are aware that this type of thing is going on.

If you or your loved ones have been affected by the matters detailed in this blog please get in touch. We offer a Second Opinion Service to review your current arrangements and to ensure they are sufficient for your requirements. To find out more, please contact Neil Bailey via email or call 01327 354321.