Pension release and pension liberation fraud

Subject to the rules of the scheme pension benefits can be taken from the age of 55, but the Pensions Regulator and other authorities are very concerned that members may be tricked into losing money by trying to take it earlier. This is something union reps should keep a watch for. The Pensions Regulator calls it “pensions liberation fraud” and can point to instances where individuals in their 40s and early 50s have lost out:

“Individuals are often not aware that a large part of their fund will be deducted as fees, and that there are significant tax consequences for accessing your fund before the law allows. In addition, individuals are not always aware that their remaining pension pot may be transferred into high risk and entirely unsuitable offshore investments which may not provide adequate, or indeed any, benefits on retirement.”

The Money Advice Service says: “Think carefully before making decisions about taking cash from your pension early. You may be left with a limited pension pot for retirement”. It also warns that schemes that say they can “unlock” a pension before age 55 “are illegal, have hefty charges and are scams which can cost you dearly.”