Fraudsters are exploiting the reforms to the pension sector, set to be enacted in April 2015, which allow those of pensionable age, 55 and over, to take out the total £30,000-strong amount of their pension as opposed to the £18,000 they are currently afforded access too.
These con-artists are misinforming people aged under 55 they are able to get their hands on these funds, focussing on the concept of ìliberationî to hoodwink unwitting folk into believing they can enjoy a premature pension pay day.
As such, every day members of society are being coaxed into a self-assurance, from which they believe their debt ailments, child-rearing financial obligations and travelling aspirations can be funded through this quick fix, and whatís more, they will have the funds for further investment opportunities.
The reality is far graver, as instances of tragedy resulting directly from the aforementioned mode of fraud have threatened to manifest within society; one elderly motherís 40 yr old son took his own life after being duped by delusions of exposure to a £42000 pension pot.
ìThe new pensions freedom has given a massive turbo-boost to fraudsters,î says Alan Higham, retirement director at Fidelity Worldwide Investments. ìWith eight months to go before it arrives, I already receive five calls or texts a week from dodgy firms offering a ëfree pensions review as promised by the governmentí. ìThese are often from set-ups with names confusingly similar to those of regulators and regulated organisations.î
How the ëPension Liberationí Fraud works
Prospective marks are located and lured in via phantom mobile calls, text messages or by means of seedy emails or other covert online communication. The content of these unsolicited communications will typically offer a ëfree pension reviewí, a ëhow to get your money backí programme or some other such fantastical, financial perk. Compliance with any of these incongruous notions can result in your entire pension fund being moved from your current programme to one backed by these fraudsters, and you can count on your capital not being used in your interest 99.99% of the time.
Following obtainment of your pension fund, these sleazy companies will purport to make regular loan payments from your pension to you, and will afford you a modicum of your money to back up this claim. However, they will not impress on you the 30% private fee they will assume; nor the HMRCís ëunauthorised withdrawalí expense anyone under the age of 55 will automatically activate, which can result in up to 70% of your pension fund being seized by the taxman.
Moreover, the fraudsters will stress the immense benefits of the investment opportunities they provide, ranging from obscure foreign properties to potentially huge bitcoin gains. All of these ëinvestment opportunitiesí are entirely farcical, and merely symbolise the cement used by these scam artists to layer together their house of cards.
Another commonly seen technique in the promotion of such pension scams is the pledge that a companyís particular swindle is state backed, and approved by the exchequer. This is categorically false and such baseless claims ought to have no heed paid to them whatsoever.
Could more groups be adversely affected?
Due to these heavily incentivised ëpension liberationí scams, there are growing uncertainties as to whether they could begin impacting greatly upon over 55s who, bar a small levy, allowed to lawfully access their pension pot.
Due to the fanciful no-tax claims, and the many other eye-lighting effects of the manner in which these scams are broadcast, many unsuspecting savers could be persuaded to go the route of these perceived legitimate companies. The reality remains that savers are enduring tough economic times, and there are scenarios in which many upstanding people are subjected to harrowing financial choices in times of need. For instance, the cost of a rare surgery or legal bills for a dependant could lead to even a seasoned professional taking a wrong turn into the arms of these corrupt companies.
This viewpoint is projected by Steve Hyndman, head of financial protection at insurance firm Phoenix Group, who warns of the potential viral effect of ëliberation pensioní scams.
He says: ìTaking money from the over-55s who will be able, legitimately, to do what they like with their pensions pot, will be far easier than current liberation frauds. ìScam merchants wonít have to go to the bother of trying to register phoney schemes to get past HMRC and people like me. There are schemes already in force undertaking aggressive marketing to persuade consumers to cash in their pension. Phoenix has, so far, prevented more than £11m of potential liberation fraud, and expects to see more.î