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This is an item I found in the “TFL (Transport for London) Pension Fund News, 2014,March edition.
In regards to the article, the UK Government is allowing from 6th April 2015 people who are paying into a pension scheme and are at least 55, will be able to take out their money in cash.
The Pensions Regulator and other Government agencies are becoming concerned about a practice known as ‘pension liberation’, also known as ‘pension loans’ and pension scams’.
This is a transfer of a scheme member’s pension savings to an arrangement that will allow them to access their funds before age 55.
Converting a pension into cash might sound very attractive to people who urgently need money.
However, if something sounds too good to be true, it invariably is.
Members are not informed, or are misled, as to the consequences of entering into one of these schemes, You could face a tax bill of more than half your pension savings, and those being targeted are usually not being told about the potential tax implications. In addition to this there may be unexpectedly high fees, typically 20 to 30 per cent for entering into one of these arrangements, and high risk investments for the remaining funds.
People are advised to be vigilant. The Pensions Regulator in conjunction with the Pensions Advisory Service has highlighted some of the warning signs to look out for which include:
• Unsolicited text message or call
• Targeting people with poor credit histories
• Requests for personal information
• The offer of ‘cash bonus’
• Loans from scheme to other members
• Access to pension before age 55
• Transfers overseas
• No copy documentation – you should always be provided with the paperwork relating to the transfer, including full details of how your pension will be paid on retirement.
• Member encouraged to speed up – use of couriers or cash incentives to move quickly
• The organisation is not registered or newly registered with HM Revenue & Customs (HMRC).
Further information is available online via the following link:
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