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Call: 0800 011 3797


Pension Liberation Plans

To liberate your pension sounds to many people like a good thing but, in the pensions world, pension liberation is normally linked to fraud and accessing your pension benefits before the age of 55.

Pension liberation fraud can occur when you try to transfer your pension benefits to an unregulated scheme before the age of 55.  Organisations offering these opportunities frequently refer to them as  ‘pension loans’ and offer cash incentives to sign over your pension benefits.

If you are suffering from ill health 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.  If you access your pension benefits before the age of 55, HMRC will consider this as an unauthorised payment.  Unauthorised payments are subject to high tax charges by HMRC, which you cannot reclaim. These are at least 55% and can be as high as 70% of the pension pot.

Pension liberation becomes pensions liberation fraud when you are not informed of the potential tax consequences involved and when some or all of your money is unable to be located.

If you are a victim of pension liberation fraud, in addition to a high tax charge you will also have fees deducted from your pension for the transfer.  These fees are unlikely to be recovered and can be 20% or more of your pension savings.

Warning signs

Things to look out for are:

  • Being approached out of the blue over the phone or via text message.
  • Pushy advisers, often unregulated, who claim to be able to help you access your pension before age 55.
  • Companies that offer a 'loan', 'saving advance' or 'cashback' from your pension.
  • Any reference to 'loopholes', overseas investments, creative or new investment techniques.
  • The Pensions Regulator has worked with other agencies, including ourselves, to produce information illustrating the threat to your pension if you are taken in by such offers.
  • More informaiton for members of pension schemes looking to understand the consequences of these offers can be viewed here.
  • Be alert to offers like this and if in any doubt take advice from a regulated financial adviser. If you think you may have been made an offer contact Action Fraud on 0300 123 2040.
  • If it sounds too good to be true, then it normally is!

For further information on read our spotlight on pension scams.


How to avoid pension liberation fraud

There are a number of things you can do to ensure you do not fall victim.

  • Make sure that anyone giving you financial advice is approved and regulated by the Financial Conduct Authority (FCA). You can check if an adviser is approved through the FCA register at www.fca.org.uk/register  before you agree to anything.
  • You should ask the scheme that you are transferring from to check the new scheme's HMRC registration - they can make sure if it is a legitimate scheme.  
  • Never be rushed into making a decision. If it sounds too good to be true, it probably is.
  • If you have any concerns about the offer that has been to you, you can ring our helpline on 0300 123 1047.
  • Don’t proceed unless you are absolutely certain your money will be safe because once you transfer it’s too late.
  • If you suspect you might have already been targeted by fraudsters you should contact Action Fraud on 0300 123 2040.
  • To find out more, click here to  read the Pensions Regulator member leaflet which explains more detail on how to spot potential scams, what to do if you suspect a scam and who to contact.


Complaints and Enquiries about Blocked Transfers

Most complaints we have received are from people whose pension provider has not allowed a transfer because the provider has concerns about the legitimacy of the receiving scheme.

The Pensions Regulator has given guidance to pension schemes and pension providers about delaying transfers where it is believed the destination is not a legitimate pension scheme.


How can we help individuals when bank accounts are frozen, due to action by the Pensions Regulator?

If the Regulator decides to investigate a pension scheme, accounts may be frozen because there is a suspicion that the assets are not being used to provide approved pension benefits.  There may also be a risk that the assets have been stolen.


Complaints about scheme negligence

We also receive complaints from individuals who have completed a transfer to an unauthorised scheme, who wish to make a complaint about their previous pension provider being negligent in transferring their benefits.

We are happy to review paperwork. Where a valid instruction to transfer exists it will be difficult to agree whether a scheme has acted negligently in transferring someone’s benefits. But if an individual wishes to pursue a complaint they should first take a complaint up in writing with their previous pension provider.  We are happy to talk you through your next steps.


Frequently asked...

Where can I find out more?

If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.

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