FORMER Chancellor George Osborne gave everyone over 55 the right to cash in their retirement pot this year despite fears that it would lead to criminals dreaming up schemes to cheat you out of your money.
But since Osborne launched those reforms pension scam losses TREBLED in just one month after he announced the new deal.
The City of London police has revealed losses from pension liberation fraud jumped 235 per cent to £4.7m in May — up from £1.4m in April when savers were given greater flexibility to spend pension cash as they wished.
The leap comes after consumer groups and MPs warned that greater safeguards were needed to protect people from losing their life savings to swindlers.
Some of the tactics used by pension scammers include offering free pension reviews, health checks and promises of better returns on their savings, pension loans, upfront cash or other promotions to tempt them. Most of these are bogus.
Some scammers are also directing members to transfer their pension savings into small (often one or two member) occupational schemes in an attempt to escape scrutiny from regulators.
Once you’ve transferred your money into a scam, it’s too late. You could end up losing all your pensions savings and face a tax bill of up to 55%.
The Pension Service has now issued a series of tips to make you aware of the tricks that fraudsters will try so that you don’t find your retirement pot has disappeared. Scammers will try any of the following:
1. A cold call, text message, website pop-up or someone coming to your door offering you a ‘free pension review’, ‘one-off investment opportunity’ or ‘legal loophole’.
2. Convincing marketing materials that promise you returns of over 8%.
3. Paperwork delivered to your door that requires immediate signature.
4. A proposal to put your money in a single investment and claim that you can access your pension before age 55.
Is ‘pension unlocking’ a scam?
No. With pension unlocking, a person aged 55 or over can release up to 25% of their total pension as a tax free lump sum. Unlocking your pension will almost certainly mean you will have less income in retirement and, as a result, unlocking is only suitable for a very limited number of people and circumstances.