Pension Liberation Fraudsters (In my opinion they should be jailed)
I’ve had many calls over the last year by people who have wanted to access money from their pension schemes for a number of varied reasons.
A lot of these people had already been contacted by firms through texts or cold calls where they were told they can get money out of their pensions before the minimum retirement age of 55.
Whilst there are a few legitimate ways in which you can access your fund early (such as terminal illness) the majority of pensions must be accessed at 55 at earliest. The way in which these other so called pension liberation schemes work is barely legal at best and an outright scam at worst.
As you can see from my headline above I feel strongly about this.
Therefore I thought this would be an opportune moment to discuss these schemes as a new body been set up this very week to highlight this problem. Providers, trustees, trade bodies and lawyers have joined together in an effort to clamp down on pension liberation.
The parties have formed The Pension Liberation Industry Group, which aims to produce a standard for dealing with requests by pension scheme members wishing to transfer funds from one registered workplace pension scheme to another.
What Exactly Is Pension Liberation?
Also known as ‘pension loans’ or ‘pension scams’ Pension Liberation is quite simply the transfer of a member’s pension to an arrangement where they can get access to the fund before age 55. In normal circumstances a member would have to wait till 55 and even then, in most cases, that member would only be able to access 25% of their fund as a lump sum.
In many cases Pension Liberation can result in tax charges of more than 50% of the member’s fund and in a great many cases the client is not informed of the potential tax implications.
If you are contacted by any of these companies through texting, e-mail or cold call you should be very wary indeed and contact a financial adviser for a second opinion. You should always make sure you know who and what you are dealing with.
The new body being set up is aiming to draw up a code of practice for transfers between schemes, in the hope this will act as a barrier by requiring:
- The transferring scheme to obtain information/evidence to provide reasonable assurance that the receiving scheme is valid
- Reasonable steps to minimise delay and provide reassurance to all parties
- Appropriate discharge forms
- Transparent communication with members and other parties
- The reporting of suspect cases
Converting a pension fund into cash can sound attractive to people who desperately need money but you should remember you may well be putting you and your family’s financial future at risk.
It is easy to be duped. The Pension Minister Steve Webb stated that last year in October alone £420 million had been transferred from pension savings into forms of these pension liberation schemes.
Don’t be the next victim.
If you have any questions about this subject please don’t hesitate to get in touch.
I’ll be happy to help.