It is estimated more than 320,000 people aged 55 or over will become eligible to help themselves to unlimited funds from their personal pension funds after the Government liberalises the pensions regime, which is likely to release hundreds of millions of pounds into the economy.
So far some £500m has been lost to pension scams, according to Government experts. But the actual figure is thought to be much higher as not all activity is reported.
This has created concern as many believe that unscrupulous operators are targeting over 55s with unregulated investment schemes designed to part them from their newly liberated pension pot.
Our concerns are shared by a number of high level authorities who launched Project Bloom – a cross-agency task force set up to tackle the growing problem of so-called pension’s liberation fraud.
The project, which is co-ordinated by The Pension Regulator (TPR) and numbers the Financial Conduct Authority (FCA) and Serious Fraud Office (SFO) among its members, has already overseen numerous High Court actions against fraudulent pension operators.
The SFO has reported that it has acted against dozens of illegal schemes and highlights one case in which a man took his own life after never receiving a £17,000 lump sum when he transferred his £42,000 workplace pension.
We want to provide a helping hand to the growing fear that nefarious operators will be targeting the unwary pension fund holder.This is not just about the over 55s; almost anyone with a private pension can be a victim and some of these schemes are sophisticated and very convincing. It is vital that you check out the credentials of anyone who is offering you something that it didn’t occur to you to buy until you were approached.
Just be careful and sensible, and remember the old maxim that if it sounds too good to be true, it probably is.
Some potential warning signs include:
• Being cold-called by a company you don’t know
• Unsolicited ‘spam’ text messages or emails• Schemes which invests in anything not based in the UK
• Schemes which invest in something you were previously unfamiliar with
• Offers of transfers overseas
• Schemes which use phrases like ‘legal loopholes’, ‘cash bonuses’, ‘government endorsement.’
If you have properly planned your finances there should be no need to access large sums of money from your pension – unless there is serious emergency like sudden ill health.
But you can be sure there will be people out there who try to make you do so and the danger of many of these schemes is that they sound entirely plausible and on the surface may seem entirely legitimate – yet somewhere in the transaction there will be something dodgy.
It is very difficult for the regulator to keep these people out of business so you must be vigilant. If you are at all suspicious, please just give us a call and we’ll be quite happy to give you some guidance on the legitimacy of any scheme.
Don’t lose a lifetime’s savings in a minute. Take a step backwards and have a good think about it. Make absolutely sure anyone you do business with is regulated by the FCA for a start. If you deal with an unauthorised firm you will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.”