With Ministers, regulators and the pensions industry meeting this week for an urgent summit to crack down on pension liberation fraud, Steve Webb has warned the public to beware of offers to transfer their pension that are ‘too good to be true’.
So-called ‘pension liberation’ schemes are becoming an ever more prevalent way to scam people out of their hard-earned pension savings. They persuade people to hand over their pensions in exchange for instant cash. However, to access a pension early it is often not explained that it will result in paying up to 55% to the taxman, and what is left could be invested abroad outside the reach of UK regulators.
Later this week (Thursday 12 September) the key players in the fight against pension liberation fraud will attend a summit in London, hosted by the Pensions Regulator, to discuss with pension providers and industry groups how to disrupt this scourge on people’s savings.
The Minister also warned that often these companies will prey on people in financial distress using hard-sell techniques. Back in May this year the City of London Police raided a suspected organised crime gang believed to be cold-calling and text messaging pension holders across the UK.
Minister for Pensions Steve Webb said:
"Pension liberation fraud is a crime. That is why, as part of our plans to build a fairer society, we are working across government and industry to stamp it out and to raise awareness of the dangers of handing over your pension pot. By coming together this week we will look at what else could be done, including whether we may need to change the law.
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."
A cross-government taskforce including the Department for Work and Pensions, the Pensions Regulator, the Financial Conduct Authority, the Serious Fraud Office and others are working to root out these fraudsters.
The event on Thursday will bring all of these agencies and industry together to discuss the next steps.
In rare cases, such as terminal illness, it is possible to access funds before age 55 from your current pension scheme. But for the majority, promises of early cash will be bogus and are likely to result in serious tax consequences.
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