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Pension scams

Don’t be a victim of a ‘pension scam’ (also known as ‘pension liberation fraud’)

The Pensions Regulator (TPR) is working with a multi-agency taskforce of Government, regulators, financial services bodies and criminal justice agencies (Project Bloom) to disrupt and prevent scams.

The Pensions Advisory Service (TPAS) also launched a campaign to highlight the dangers of pension scams. This campaign is being run in association with Project Bloom.

The tactics used by pension scammers are constantly changing. Many scammers are now directing members to transfer into single member occupational schemes in an attempt to escape scrutiny from regulators. They may attempt to target members interested in transferring to a scheme offering the ‘freedom & Choice’ pension flexibilities, introduced in April 2015.

Pension scammers offer free pension reviews and use ‘one-off investment opportunities’, ‘pension loans’ or upfront cash incentives to entice members to transfer their pension savings. ‘Investment opportunities’ are often overseas. For many people the offers will be bogus.

They claim they can help members access their pension before the legal minimum age of 55. It’s normally only in rare circumstances, such as serious ill health, that you are able to take retirement benefits before age 55.

They also claim they can help members take more than 25% of their pension savings as ‘tax free’ cash, after age 55. HMRC rules require that all pension savings above 25% are taxable as pension income at a member’s marginal rate, even if they are taken as a lump sum.

If you are taken in by a pension scam and agree to transfer, you will probably lose most, if not all, of your pension savings. You could also receive tax charges of up to 55% of the value of your pension for taking what is classed as an ‘unauthorised payment’ for tax purposes.

If you do receive an ‘unauthorised payment’, you must declare it to HM Revenue & Customs (HMRC). If you fail to declare an unauthorised payment to HMRC, you may be charged penalties in addition to the tax.

The Pensions Regulator(TPR) has produced the following information about Pension Scams, for members.

A video showing how easily a member could lose all their pension savings (this is based on a true story). You can watch the video here
or on YouTube here.

An infographic poster can be viewed here.

A pension scams booklet can be viewed here (pdf 389KB). This booklet lists ‘Ten steps to protect your pension’ and includes ‘typical hallmarks’ of a scam based on real life experiences of scam victims.

You can view the pension scams campaign page of TPR’s website at www.thepensionsregulator.gov.uk/pension-scams.aspx

The pension scams section of The Pensions Advisory Service (TPAS) website can be viewed here and includes information about:

  • How to spot a scam
  • What happens when you transfer into a scam
  • How to protect your pension from scams
  • What to do if you think you’ve been or are being scammed

HMRC also produced a factsheet (pdf 218KB) about ‘Pension liberation and tax’. This can be viewed here.

Go to active member > transfers

Go to deferred member > transfers