Pensions Regulator launches new anti pension scam campaign
Working with organisations across the financial industry and government, The Pensions Regulator yesterday launched a new campaign to raise awareness of the danger of pension scams.
Victims of pension scams have warned of the devastating impact of losing thousands of pounds in retirement savings as part of a hard-hitting campaign to help tackle the problem.
Chief Executive of The Pensions Advisory Service, Michelle Cracknell has said:
“Our helpline gets many calls from people who have been targeted by unscrupulous cold callers pressuring people into making irreversible and often irreparable decisions about their pensions savings. We also worry that many people who fall for these scams do not ask for help due to embarrassment. We would urge anyone that has any doubt about what they are hearing or what they have done to contact us.”
A number of people that have fallen victim to these scams have now come forward and spoken out in a bid to prevent others from being enticed into trying to access their pension pot as a lump sum or loan before age 55 without understanding the tax penalties - or from being scammed into moving their retirement savings into unregulated high-risk or bogus investments that could result in them losing their entire pension pot.
One woman, whose 40-year-old son took his own life after never receiving the promised £17,000 lump sum following the transfer of his £42,000 work pension, said:
“I don't want other mothers to suffer what I've been through, and what my family has been through. No matter how desperate things get, don't be tempted to cash in your pension. Don't do it - the people behind these scams are rogues who exploit people's vulnerabilities.”
A 49-year-old scam victim, who is potentially facing an £18,000 tax bill and risks losing her home after falling victim to a 'pension loan' scam added:
“These scams target vulnerable people. I feel very angry that I have been misled. Ignore the sales patter, ignore the glossy websites, ignore the cold calls and text messages. Go to an independent financial adviser - speak to an expert.”
As part of the Government awareness drive, The Pensions Regulator has refreshed its 'Scorpion' material to reinforce the message to consumers not to be taken in by cold calls, text message spam or website offers claiming to be able to help them cash in their pension. The regulator is urging pension trustees and providers to include the leaflet in the next annual statement sent to members, and anyone who requests a transfer in the meantime.
Pension scams may sound legitimate but there is a high risk that once members release their funds in this way, their money will be moved into dubious investment arrangements, often overseas and unregulated. Home visits from 'introducers', offers of 'free pension reviews', claims about 'legal loopholes' and unusual investments like overseas property, storage units or biofuels are all used to fool members into thinking they're being offered a legitimate pension transfer.
Members are often not properly warned that if they access their pension pot before the legal minimum age of 55, they face high tax and unauthorised payment charges and those arranging the transaction will cream off a significant percentage as fees.
The Pensions Regulator's executive director for DC, governance and administration, Andrew Warwick-Thompson said:
“Pension scams remain prevalent and need to be stopped. We have seen victims lose their entire pension savings by signing up to these offers. If you are approached by someone claiming to be offering advice or that they can help you move a frozen pension, don't get sucked in. You could be left with nothing for retirement, you will not be compensated, and you may have to pay fees and a high tax charge.”
HM Revenue and Custom's (HMRC) head of pensions business Graeme Hood said:
“Only in very rare circumstances does the law currently allow pension savings to be withdrawn before age 55. If people try to release their funds prematurely, they are likely to be asked to fill in a self-assessment form and may be liable for an unauthorised payment charge.”
In the coming months, The Pensions Regulator will be publishing a report on the outcomes of a number of its investigations into pension scams.
The new campaign is being led by the Department for Work and Pensions, The Pensions Regulator, The Pensions Advisory Service, Money Advice Service, Financial Conduct Authority, Serious Fraud Office, HMRC, Action Fraud, National Crime Agency and City of London Police.
If you are approached by anyone saying they can help you access cash from your pension or offer you exotic sounding investment returns - think twice. If it sounds too good to be true it usually is.
You can call our helpline on 0300 123 1047 if you have any worries, are unsure or have any questions.