Your Past is Your Future September 2013 Issue 15 | Page 2

Beware of Pension Liberation Fraud
Fraud is a word you never want to associate with your pension benefits. However, an activity known as Pension Liberation Fraud is increasing across the UK. Pension scheme members are being approached by unscrupulous companies with the promise of instant cash sums and/or early access to their pension if they transfer their pension savings to them. It is not illegal to transfer pension pots to other approved pension arrangements, but taking money out of those pots and before age 55 may be in breach of HMRC Regulations resulting in severe tax penalties. Some companies intentionally withhold information about these penalties and deliberately try to mislead people. This is illegal! They don’t tell people that they will take an administration fee, which is usually a very high amount, therefore reducing the amount available to provide a pension income. Additionally, and most importantly, people may be faced with a hefty tax charge of up to 40% of the amount being taken out early. The end result can be that more than half the pension pot has been swallowed up in fees and taxes leaving a lot less pension for retirement. So, what are the warning signs that you are being targeted by one of these companies? Cold calling - Receiving a phone call or text that you were not expecting. The caller is very pushy and may press you for personal information. They say that you need to act quickly and give you very little time to consider your options. They promise an immediate cash payment. Promise that they can pay your pension earlier than your current pension scheme, even before age 55.

five steps to avoid becoming a victim:

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Never give out financial or personal information to a cold caller. Find out the company’s background through information on-line. Any financial advisors should be registered with the Financial Conduct Authority (FCA). Ask for a statement showing how your pension will be paid at retirement and question who will look after your money. Speak to an advisor who is not associated with the proposal you’ve received, for unbiased advice. Never be rushed into agreeing to a pension transfer.

You can learn more about Pension Liberation Fraud by visiting www.pensionsadvisoryservice.org. uk/taking-payments-from-your-pension-pot/ pension-liberation-plans. Here you can download an information pack and watch a video on YouTube. We are also doing our utmost to prevent our members from falling foul of this illegal activity. If you are thinking about, or are in the process of, transferring your pension savings and have any concerns, please contact us (contact details can be found on the back page of this newsletter). You can also contact Action Fraud on 0300 123 2040.

The Pension Regulator has launched a campaign to raise awareness of Pension Liberation Fraud and given five steps to avoid becoming a victim:

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