A secret briefing between the government and trade bodies about pension liberation firms offering savers access to their pots before the age of 55 has set off a new campaign against rogue advisors.
Pension liberation was outlawed by the High Court and now regulators and pension firms are tackling the problem.
The briefing was staged by the Pensions Regulator (TPR) and revealed what the issues are, what the campaign will do and why the government is determined to crackdown on the practice.
The new campaign, called ‘Predators stalk your pension’, will see the TPR reveal case studies of offenders and telling savers what warning signs they should watch for.
The campaign will also tell pension advisors what they should be aware of to prevent their clients falling victim to fraud.
Pensions task force
Warnings about the actions of firms offering the service have also been made by the Financial Services Authority and they will work with the TPR to tackle this growing problem.
A task force from the Serious Fraud Office, the Serious Organised Crime Agency and HM Revenue and Customs is ready to take on rogue advisers.
Pension savers need to be aware that cashing in early to get access to their money will make them poorer in retirement because pension liberation will decimate their savings.
There are firms offering access to the money from the age of 45 – but pension laws only allow access to the fund under special circumstances to anyone aged under 55.
However, those signing up have found that the firm then charges thousands of in fees and leaves the saver liable to hefty tax charges
Despite the best efforts of financial authorities to stop the schemes they are now fairly widespread
Illegal pension transfers
Increasing numbers of financial firms, including Hargreaves Lansdown which is one of the UK’s biggest investment firms, are refusing to transfer money from self-invested personal pensions (Sipps) to schemes they suspect are involved in pension liberation.
The firm says it would be ‘irresponsible’ if it allowed such transfers – and they have been joined by several others in their stance including Standard Life.
Those running pension liberation schemes are increasingly targeting those who worked in the public sector or military and offer bankrupts a way to access their money.
The firms use a number of different structures, but invariably an offshore company or trust transfers pension assets.
Pension liberation – sometimes called pension unlocking – was ruled illegal in a multimillion pound court case last year.