More About Pension Freedom and the Pension Scammers.
There is no doubt that Pension Freedom has proven to be popular, so far. The right of people to withdraw their retirement savings and do what they want to do with them (rather than simply being allowed to take a lump sum and invest the rest in an annuity) was introduced on 6th April 2015, and 2 months later c.235,000 people took out more than £1.8 billion from their pension pots. At the same time there has been a rise in pension scammers trying to convince these people to invest in bogus schemes which can result in the money being lost for good.
Why is Pension Scamming so Attractive to the Scammers?
The Association of British Insurers (ABI) said that in April and May 2015, those savers aged 55 and over took out more than £1bn from pension pots, while a further £800m was taken out by savers in this age group, using income draw down. At the same time, there has been a significant decline in the amount of money put into annuities.
With figures like these, it is not at all surprising that the pension scammers have multiplied in an attempt to get their hands on some of this money.
What to Look Out For
The first thing to be wary of is if you have been offered a free pension review. If you have, then we recommend that you check the credentials of the person/company first to make sure they are genuine. In general, if someone offers you a “great opportunity” especially one that requires a quick decision to take advantage of, it’s probably a scam.
One of the most common scams since the introduction of Pension Freedoms is in the area of overseas investment opportunities. These operations are often fronted by a polished sales person who can sound very convincing about the superb ‘risk free’ returns you can expect. The reality is that it’s probably a scam. And the data from Aegon, shows about 80% of requests for the transfer of a pension overseas for ‘investment purposes’ are scams. Scamming is more common than is thought.
What to do if You Suspect Pension Scamming
The Money Advice Service quotes the following as being likely signs of a pension scammer:
- Those that promise extra tax savings and/or very high returns from overseas investments or new or ‘creative’ investments
- Those that claim to know of loopholes that allow you to get more than the usual 25% tax-free cash
- Those that say they can help you or someone else unlock your pension before age 55
- Those that encourage you to transfer your pension quickly and even send documents for signing by courier
If you suspect that you have been approached by a Pension Scammer, you should report your suspicions to the Financial Conduct Authority , or Action Fraud.
In the meantime, for help and advice regarding your pension now that Pension Freedoms are with us, contact us or call us on 0121 693 0690 for a FREE initial consultation.
