Government ministers, regulators and figures from the pensions industry met last month to discuss how to tackle ‘pension liberation’ fraudsters. The Financial Conduct Authority and the Serious Fraud Office were also at the meeting on 12 September.
Pension liberation scams convince people to hand over their pension pot in exchange for early access to the cash, without any explanation of the 55 per cent tax charge for doing so.
Pension liberation fraud often involves:
• cold-calling techniques as well as bulk text messaging
• persuading the victim to hand over their pension fund, without any explanation of the tax charge for accessing the funds early
• investing the remaining money abroad out of the reach of UK regulators.
Pensions Minister Steve Webb warned savers to be wary of offers that seem ‘too good to be true’, especially concerning early access to pension funds. He said:
“By signing up to one of these schemes you will destroy your future retirement savings. The promise of easy money when times are tough is all too tempting, and there are far too many unscrupulous people who will prey upon this. These people want your pension pot and if you are offered a deal to unlock your pension, don’t touch it.”
Access to pension funds before the minimum age of 55 without incurring a substantial tax charge is rare and is usually only applicable in the event of terminal illness.