Personal Pension 

Pensions liberation fraud watchwords revealed

Pension liberation fraudsters make full use of the phrases ‘legal loophole’, ‘sophisticated investor’ and ‘free’ to con potential victims, campaign group ACA Pension Life has revealed.

ACA Pension Life’s chairman Angela Brooks said every year, many people become victims of pension fraudsters, with the majority of those duped by the liberation scammers losing their entire lifetime savings and left facing debts and tax charges from HM Revenue & Customs.

She said: “It is with depressing inevitability that more people have fallen victim to these sharks since the government introduced its pension freedoms reforms last April that allow over-55s to access their entire pension pots.

“It is important to inform the public on how to recognise a scam to prevent more people losing their hard-earned retirement savings.”

Ms Brooks added although the fraudsters were constantly changing their tactics, there were three “key phrases”, which campaign group members had reported, that “should immediately ring alarm bells if you are approached by a pension liberation firm”. These are: legal loophole, sophisticated investor and free.

Three Warning Bells
Legal loopholeIf anyone tells clients there is a ‘legal loophole’ that allows them to access part or all of their pension before the age of 55, and that there will be no tax to pay, Ms Brooks says they are lying and the client should disengage immediately.
Sophisticated investorIf anyone tells clients ‘you’re a sophisticated investor’ and ‘you should be investing your pension in assets which are not traditionally available,’ red flags should be hoisted.
FreeIf clients are told they can transfer their pension free of charge, then clients should make sure they find out exactly what the long-term charges entail. There is no such thing as ‘free’.

She said there were other warning signs, but these phrases were among the most common, and the most effective ways used by fraudsters to entice people into handing over their life savings.

Gillian Guy, chief executive of Citizens Advice said: “Pension scams are dangerous and can rob consumers of their entire pension pot, leaving them with little or no savings for retirement.

“We have found that scammers are using new ways to go after pensions including offering free pension reviews or promising to invest funds in schemes which don’t necessarily exist.

“Citizens Advice can help people who had an offer or signed up to a pension scheme they’re unsure about.”

In December last year, ACA Pension Life said the government is “ultimately responsible” for the potential loss of billions of pounds of savers’ pensions by refusing to “fix a broken system”.

The group, which aims to rescue victims of pension liberation scams, announced earlier that month that it had dealt with pension scheme members who have lost more than £20m across 13 schemes, with total losses in excess of £2bn.

The Pensions Regulator has refreshed its ‘scorpion’ campaign to alert retirement savers and pension scheme trustees to the risks and hallmarks of a fraud, produced in partnership with regulators and government partners to tackle scams.

The campaign offers advice for savers on how to scam-proof their savings by spotting a fraud, and what to do if they have been contacted by a suspect organisation.

HMRC strengthened its registration procedure to prevent new schemes being set up to facilitate scams and can impose sanctions and de-register schemes that break the rules.

Schemes will not be able to register with The Pensions Regulator without having their registration approved by HMRC first.

A spokesman said: “We continue to work with a taskforce of government, regulators, financial services bodies and criminal justice agencies called Project Bloom to disrupt and prevent scams.

“Our message to retirement savers is check the facts before you make an irreversible decision – a lifetime’s savings could be lost in a moment.

“Our advice is to beware of website offers, cold calls or text messages claiming to be able to help members access their pension pots before age 55 or investment opportunities offering unusually high returns.”

ruth.gillbe@ft.com