The Pensions Industry is currently being subjected to predators stalking pension transfers – often known as Pension Liberation Fraud. Companies are actively marketing through text messages, websites, adverts and newspapers and cold calls and offer to transfer your pension scheme to a new arrangement and to arrange cash to be paid back to the member sometimes structured as loans from the new pension scheme.
Current legislation allows members to receive retirement benefits after the age of 55 but these schemes are specifically targeted to the under 55s and to those seeking to access money quickly. This is a direct result of the economic downturn and also due to the post 2006 simplification regime where schemes do not have to be approved by HMRC. They only need to be registered with HMRC and anyone can do this.
There can be serious tax consequences in releasing cash before age 55. Moreover remaining money in the new pension scheme may be transferred into highly questionable investment structures, which are frequently based overseas and involve property. The Pensions Regulator (TPR), HMRC and Financial Conduct Authority are all aware of this.
The Pensions Regulator has put out an advertising campaign making Members, Trustees and Professionals aware of this Pension Liberation Fraud activity. You may have noticed a rather nasty looking scorpion in the advertising! Further details can be found at www.pensionsregulator.gov.uk/individuals/dangers-of-early-pension-release.