Pensions 'liberation' scam tops £400m

Middle aged couple Do not be tempted to release money from your pension fund before the age of 55, regulators say

Related Stories

The pensions regulator says individuals have given illegal "pension liberation" schemes an estimated £400m since 2008.

The schemes offer to give people early access to their pension funds.

They involve transferring the pension pot from a legitimate scheme to one set up by the "pension liberation" company.

But Bill Galvin, chief executive of the Pensions Regulator, has told BBC Radio 4's Money Box programme tax charges and unregulated investments abroad could leave little pension behind.

Costly transfers

Legitimate pension schemes are normally under a legal duty to transfer a pension to any scheme which is registered with HM Revenue and Customs and the Pensions Regulator.

But Mr Galvin said if a legitimate scheme was worried about where the money was being transferred to, there were different options available.

Start Quote

We have shut down over the last 18 months a number of vehicles”

End Quote Bill Gavin Chief Executive, The Pensions Regulator

"There are circumstances in which we will support them in a decision to delay or not to transfer monies where they have certain suspicions," he said.

The regulator said challenging economic circumstances were tempting more people under 55 to attempt pension liberation.

It warned people to beware of unsolicited phone calls or emails offering the service, especially if they were being pressurised to act quickly.

It said sometimes bankruptcy lists were being scanned to find suitable victims as well as those of people in occupational pension schemes.

Tax implications

Signing up can often be disastrous. If someone has a pension pot of £20,000, schemes may offer them access to half of that.

The scheme will take a commission of around £4,000 - 20% - leaving the victim £6,000 in their pension fund.

That is often invested in offshore vehicles and might never be seen again. The individual will also be obliged to pay tax of between 55% and 70% on the money released.

The Pensions Regulator is about to launch a publicity drive to warn people of the dangers.

Bill Galvin said it is taking strong action against rogue firms.

"We have shut down over the last 18 months a number of vehicles which have been used for 'pension liberation' schemes, we have installed independent trustees," he said.

Money Box is broadcast on Saturdays at 12:00 GMT on BBC Radio 4 and repeated on Sundays at 21:00 GMT.

You can listen again via the BBC iPlayer or by downloading Money Box podcast.

Have you been tempted by pension liberation? Let us know your views

If you are happy to be contacted by a BBC journalist please leave a telephone number that we can contact you on. In some cases a selection of your comments will be published, displaying your name as you provide it and location, unless you state otherwise. Your contact details will never be published. When sending us pictures, video or eyewitness accounts at no time should you endanger yourself or others, take any unnecessary risks or infringe any laws. Please ensure you have read the terms and conditions.

Terms and conditions

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features & Analysis

Elsewhere on the BBC

  • BikeBeautiful bikes

    These innovative and arresting new bikes are reinventing the humble two-wheeler for the 21st Century

Programmes

  • (File photo) A mother polar bear and two cubssThe Travel Show Watch

    From polar bear watching to crocodile conservation - highlights from 2014

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.