The true picture of the financial devastation pension liberation fraudsters have triggered for retirement savers may be much worse than official figures, according to campaigners taking on the crooks.
Angela Brooks, Chairman of ACA Pension Life, which represents 800 scam victims claims 13 pension liberation outfits have swindled victims out of more than £2 billion.
Government figures put the losses as much lower – around £400 million a year.
Brooks argues the government is responsible for the losses because no action was taken to stop the fraudsters.
£300,000 tax penalty for pilot
HM Revenue and Customs (HMRC) is pursuing the victims for millions of pounds of tax penalties for switching their retirement savings to pension liberation funds.
The tax charge starts at 55% of the amount transferred and can reach higher under some circumstances.
One airline pilot faces a tax bill of £300,000 for attempting to transfer his £500,000 workplace pension to a pension scammer even though the transfer was never completed and the cash is locked in a frozen pension scheme after the airline went into administration.
“Many of the people who have come to us for help are British expats living in Spain,” said Brooks.
“We set up our group primarily to help expats, but word has spread since we started and we are now covering other countries and the UK.
“Many of these people are innocent victims of fraudsters and as a result, have lost their lifetime savings.”
Brooks explained the government is not doing enough to stop pension scams.
“The government is failing in its duty to protect people from criminals and allowing this scandal to run,” she said.
“I know it’s not an easy job to stop the scammers because when one scheme is closed they pop up somewhere else under a different guise.
“We would like to see the government set up an independent task force with specialists from HMRC and other agencies to tackle the problem.”
Ms Brooks concludes: “We’re calling on the government to set up an independent, specialist task force to tackle this serious and growing problem with a joined-up approach.
The government does publicise pension liberation risks through an ongoing campaign called Operation Scorpion.
“We do not discuss individual cases,” said an HMRC spokesman. “Tax legislation is applied fairly and consistently in line with the rules. We do try to be as supportive as possible for anyone who has made a genuine mistake.
“Tax reliefs are to help build a pension pot which is why accessing the money early through a pension liberation scheme can lead to a significant tax charge.”