Pension scammers promise to convert pension funds into cash before retirement, or in some cases they may suggest people can take more than 25% of their pension pot as cash. Pension fraudsters promise to convert pension benefits into cash before age 55.
Criminals are believed to be fraudulently exploiting the pension liberation process in a number of ways. These include failing to advise members of the tax implications of receiving cash from their pension; failing to advise members of the full extent of fees to be paid in relation to any onward investment; falsely representing anticipated levels of returns when investments are either non – existent or incapable of providing such a return.
The scammers have a variety of tricks to catch you out. They may:
- claim that you can access your pension pot before age 55
- approach you out of the blue over the phone, via text message or in person door-to-door
- entice you with upfront cash
- offer a free ‘pension review’ or try to lure you in with so-called ‘one-off’ investment opportunities.
Check the facts before you make an irreversible decision. A lifetime’s savings can be lost in a moment.
The Pensions Regulator’s five steps to avoid becoming a victim of a pension scam:
- Cold called about your pension - just hang up!
- Check the credentials of the company and any advisers – who should be registered with the Financial Conduct Authority.
- Ask for a statement showing how your pension will be paid at retirement, and question who will look after your money until then.
- Speak to an adviser that is not associated with the deal you’ve been offered, for unbiased advice.
- Never be rushed into agreeing to a pension transfer.
For more information about pension scams visit The Pensions Regulator website.
Before you sign anything, call The Pensions Advisory Service on 0300 123 1047
The HM Revenue & Customs website highlights the tax consequences of pension liberation to individuals.
If you have been a victim of this type of fraud, report it to Action Fraud by calling us on 0300 123 2040 or by using our online reporting tool.
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