Recently the Government introduced new freedoms to give people greater than ever access to their pension savings.
For instance, if you are 55 or over you can now take as much or as little out of your pension savings as you like, including:
• Use it to buy an annuity, providing a regular income for life
• As a flexible retirement income (flexi-access drawdown)
• Take it as cash in stages
• Take the whole pot in one go
Unfortunately, and somewhat predictably, these opportunities have also attracted the attention of fraudsters, who see it as a way to exploit these freedoms and cash in by gaining access to your hard-earned pension pot.
Since the introduction of these new pension freedoms in 2015 there has been a sharp rise in people being cheated out of their pensions and other savings.
And don’t think that it is only retired people who fall foul of these scammers; you can be targeted at any time.
People targeted for their pensions fall into two camps: those aged under 55 and those aged over 55.
For those who are under 55, with very few exceptions (such as you are too ill to work or your profession permits early retirement prior to 2006) you cannot release the money from your pension early.
Scammers, however, will tell you it’s possible, luring you with promises of one-off investments, pension loans or upfront cash if you agree to repay them from your pension pot – only for you to later find those pension savings have disappeared.
The bottom line is this: if someone tells you they can access your pension before you are 55 they are not being honest, so stop, think and take professional advice.
Those who are over 55 are more vulnerable because you can take money from your pension at any time simply by signing a few forms – so a perfect target for the scammers.
Many people legitimately take advantage of the fact they can withdraw 25 per cent of their pension pot as a tax free lump sum – a fact of which the scammers are fully aware and are continually looking to exploit.
A key piece of advice here is to only speak to financial advisers who are authorised by the Financial Conduct Authority (FCA) before making decisions that may affect the rest of your life. If the worst happens and a scammer gets your money, there’s very little chance you’ll get it back.
Obviously I’d like you to talk to Thomas Westcott Chartered Financial Planners about your pension affairs but you can also find an adviser in your local area by researching on www.unbiased.co.uk or check out the free Government-backed Pension Wise service to understand your options.
This has been a brief overview of the situation regarding scammers and the reasons why they will target your pension savings. In my next blog I’ll help you to spot the tell-tale warning signs that the scammers have you in their sights – and just as importantly what you can do to protect yourself and your pension pot.
For an informal discussion about your pension arrangements please contact us at Thomas Westcott Chartered Financial Planners.
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