Pension Liberation Fraud - WARNING

There is currently a huge increase in the amount of companies willing to 'unlock' your pension scheme for you, and promising to pay the money to you earlier than it was originally intended.

All they ask you to do is transfer the your pension fund to them and they will do the rest, they may even promise you a bonus for doing so.

Sound to good to be true? Well it most likely is!

The Financial Services Authority (FSA) has teamed up with The Pensions Regulator and HM Revenue & Customs to warn consumers against early release pension schemes.

An increasing number of people are being approached by firms offering to release, unlock or transfer cash tax free from their pension before they retire, for immediate use. Contact is usually made through cold calling, via websites or through small advertisements in newspapers.

You need to be very cautious about these schemes as there is a significant chance that these are scams trying to con you out of your money!

Some of the things that liberation schemes don't tell you:

  • There are usually huge tax charges where someone accesses their pension before age 55. Tax charges and penalties can amount to more than half the value of a member’s pension savings and are something that you can not get back.

  • High commission fees typically ranging from 10% to 30% of the value of an individual’s pension savings. The existence or frequency of such fees is not always made clear.

  • Where they will invest your remaining money. Some companies do not even bother investing, but won't tell you that. Those who do, will often do so in very risky investments which may not meet the legal requirements relating to the investment of pensions funds.
  • A lot of these schemes structure the cash back to the individual by way of a loan. Such loans are likely to be unauthorised payments and subject to penal repayments terms.

  • If the scheme can not make repayments on the loan, it will wind up and that will likely be the end of any payments you will receive.

If you want to discuss Pensions Liberation, you can also contact the Pensions Unit and we will be happy to discuss with you.