As the world of pensions continues to adapt and changes, scammers are taking advantage of unwitting pensioners just trying to do the best for their family. There are many financial scammers out there who have devised what they think are foolproof plans in order to swindle your money out of you. If you are vigilant and get the right free pension advice now, you will be able to spot a pension scam from a mile off. Remember you can always use our free Retirement Planner Tool to find for free pension advice.
Pension loans are widely recognised by the government and by financial authorities as the main name given to pension scams. It’s important to know first that it is very unlikely that you will be granted authorisation to release your pension before the age of 55. Any pension loans companies that offer to do this for you without penalty are more than likely scammers. These companies may ask you to put your pension pot into their fund, where you can then extract money as you go, however they may charge you a charge for every £X you spend, or you may be charged extortionate administration fees. There is no telling where your actual money will be invested or kept.
Pension liberation is a name given to a similar situation as above. Again, pension liberation companies claim that you can access your pension funds before the age of 55. However, it becomes pension liberation fraud when they fail to inform you of the tax consequences that you will be faced with by taking your pension pot out unauthorised by HMRC. If you extract your pension fund you will be subject to tax payments to HMRC which are minimum 55% and maximum 70% of your pension pot. This will mean you lose a lot of money.
The misleading name ‘pension selling’ implies that you are in fact selling your pension. It is more accurate to call it ‘cashing in your pension’. Although this can be done in a legal way, it leaves you with a great degree of instability and uncertainty. Taking your whole pension pot as a cash sum is not recommended by any financial professionals. The first 25% of this cash sum would be cash free, however, the rest would be taxed as n occupational income. You could end up losing a large portion of your pension pot this way.
Free Pension Advice
If you think you have spotted a pension scammer then contact Action Fraud, a government-backed organisation tackling financial fraud. If you have been given ‘advice’ that sounds a bit too similar to the point above, then Contact Us. Our pension advisors will be able to give you free pension advice that will help you do what is best for you.