Member Article

Government crackdown on pension liberation fraud

The Serious Organised Crime Agency has today announced the setting up of a new multi-agency campaign, which aims to help prevent pension liberation fraud.

This is a form of fraud in which members of the public are encouraged to access their pension before retirement, without receiving proper financial advice. There may potentially be severe tax consequences.

The fraud involves encouraging people to transfer their pension savings to arrangements which will allow access to funds before the age of 55. There are of course exceptional cases when this might be preferable. However, in the majority of cases, the likely result is a tax bill of more than half of the value of the pension.

The fraud normally commences with a telephone call or text message to those in a pension scheme. The sales technique is usually very pushy and people are offered very attractive cash incentives, such as loans or cash back.

Of course, the service will often carry a substantial fee, which together with the tax liability may leave no money at the end of the day.

The initiative is supported by The Pensions Regulator, HM Revenue & Customs, the Financial Services Authority (FSA), Serious Fraud Office and SOCA.

SOCA have confirmed that as well as providing information to pension professionals, the campaign offers five key tips to help members of the public avoid becoming victims:-

1. Never give out financial or personal information to a cold caller
2. Find out about the company’s background through information online. Any advisers should be registered with the Financial Services Authority (FSA)
3. Ask for a statement showing how your pension will be paid at retirement, and question who will look after your money until then
4. Speak to an adviser that is not associated with the proposal you’ve received, for unbiased advice Never be rushed into agreeing to a pension transfer

Andrew Swan, Head of the Financial Crime Unit at Newcastle-based solicitors Short Richardson & Forth LLP commented: “The advice offered by the campaign is very sensible and should certainly be followed. I would always recommend in these circumstances that proper professional advice is taken, so there is no uncertainty. If the person trying to persuade you into taking such a policy comes across as too pushy, then you are right to become suspicious.”

“Always remember that offers which look too good to be true usually are.”

This was posted in Bdaily's Members' News section by Andrew Swan .