Home Finance Don’t Be Taken In By The Pension Scammers
Don’t Be Taken In By The Pension Scammers

Don’t Be Taken In By The Pension Scammers

40
0

by Ann Haldon

knaresborough now scam imageSince new pension regulations were introduced in 2015, conmen have been using the new freedoms to target people approaching retirement. One of the scams involves telling those under the age of 55 that a ‘legal loophole’ allows them access to their full pension, with no requirement to pay tax on the money withdrawn (in reality, a rate of up to 55%).

Pension monies are then moved into an alternative scheme run by the fraudsters, with savings either being stolen or severely diminished after extortionate charges are made for the ‘service’.

To make matters worse, HM Revenue and Customs has been sending out bills to reclaim tax on the amounts withdrawn, leaving victims of the scam with no pension savings and in large-scale debt in some cases.

How can the conmen operate so effectively?

Although younger people are a clear target for pension scammers, those aged 55 and over are also under threat. With no restrictions on how pension savings can be used, unscrupulous individuals and criminal groups are taking advantage of a lack of regulation within the industry, plus an uncertainty about how best to invest such a large amount of money.

Inefficient systems also form part of the problem, enabling conmen to set up these rogue pension schemes. HM Revenue and Customs are not pension regulators, but having introduced a ‘fit and proper person’ test in 2014, they have at least attempted to control the potential for fraudulent activity.

HMRC has the power to de-register or refuse to register a new pension scheme, but some have said they should take more responsibility for what is happening to victims, rather than chasing them for tax payments.

What exactly are the new pension freedoms?

There’s no longer a requirement to buy an annuity with your pension savings in order to fund retirement, although it is still an option. Some people choose a staged income drawdown, which involves purchasing stocks and shares and cashing them in over a period of time.

Others prefer to invest in property at home or abroad, earning an income from renting out their investment, and benefiting from the increase in its capital value. People searching for the best return on their pension savings are now more vulnerable to conmen, however, especially in an industry with such complex products.

Watch out for these common phrases used by the scammers

Specific phrases have been used by conmen to garner interest in their schemes, and to motivate their victims into taking action. They include:

  • ‘legal loophole’ to avoid paying tax on pension withdrawals if you’re under 55
  • ‘sophisticated investor’
  • suggesting you invest in an ‘alternative’ area or those ‘not traditionally available’
  • ‘free pension review’ or a ‘free transfer of your pension pot’

By telling you about a free pension or government review, scammers may be attempting to obtain personal and financial information. ‘Guaranteed level of investment’ is also a phrase to watch out for, as are time-limited offers and any form of pressure to make you sign quickly, i.e. before you’re able to access other professional advice.

Project Bloom taskforce

A new taskforce has been set up by the government and the National Crime Agency to combat the problem of pension fraud. A ‘perfect storm’ of new pension regulations, lack of awareness about where to reinvest, and the fact that large sums of money are involved, has enabled scammers to get away with too many sophisticated cons.

It’s hoped that Project Bloom will bring awareness to the issue, however, and specific advice is offered to anyone concerned about their pension. You need to be wary of:

  • Anyone offering a ‘free pension review’ or access to your pension pot if you’re under the age of fifty-five
  • Offers of help to obtain a pension statement, or to provide a tracing service for lost pensions
  • An alternative investment product for your pension pot that seems too good to be true

The Pensions Advisory Service provides free advice if you’re worried about potential scams, or to discuss your pension options in general.

A sophisticated approach

One of the problems is that scammers set up sophisticated systems and procedures that include glossy brochures and polished, well-rehearsed speeches. This makes the entire con appear legitimate unless you’re aware that this type of fraud is taking place.

Bringing awareness of what’s happening is key to combating crimes like this, and hopefully Project Bloom will help to prevent more people suffering the devastating loss of their retirement income.

Those involved in Project Bloom include the National Crime Agency, Serious Fraud Office, HMRC, The Pensions Regulator, the Financial Conduct Authority, and the Department for Work and Pensions.

Watch out for fake websites

Fraudsters are even setting up fake websites with names very similar to legitimate bodies offering free advice. They may be able to gain access to your personal information in this way, and then contact you directly via phone or email.

It pays to check the web address you’re typing in very carefully, to ensure that the site is legitimate and not part of the fraudsters’ arsenal of tricks.

http://home.bt.com/lifestyle/money/investing-pensions/pension-liberation-scam-victims-facing-huge-tax-bills-11364036908047

http://www.thisismoney.co.uk/money/pensions/article-3419232/Should-pension-scam-victims-let-tax-bills.html

http://www.thisismoney.co.uk/money/pensions/article-3397828/Three-tell-tale-signs-duped-pension-fraudsters.html

 

(40)

Facebook Comments
Share with Knaresborough...
Tweet about this on TwitterShare on FacebookShare on Google+Share on LinkedInPin on Pinterest
Rachel Porter Knaresborough Now - A local community magazine which started in September 2010. I came on board in February 2011 as a co-owner for 3.5 years and then purchased the other half in late 2014. We produce our magazine on a monthly basis in both a printed and online format, celebrating local community, events and businesses. We are THE MOST COMPETITIVE advertising medium in the Knaresborough area and do our level best to support all local businesses with their advertising needs whilst also providing a valuable and readable magazine to our readers for free. We also host an interactive website with an online magazine, business directory and events calender to name but a few of its offerings.

LEAVE YOUR COMMENT

Your email address will not be published.