A coalition of regulators and Government bodies are launching a crackdown on pension “predators” who claim to offer people access to their retirement fund before age 55.
According to research by The Pensions Regulator, the amount of money accessed early from pension pots increased from £25m at the start of 2010 to £200m at the end of 2011 and “several hundred million” to date.
TPR has worked with the FSA, HMRC, the Serious Fraud Office, The Pension Advisory Service and ‘Action Fraud’ to develop a series of new documents designed to warn people of the dangers of ‘pension liberation’.
a two-page warning notice which providers and administrators will be asked to include in information packs provided to members who request a transfer;
a more detailed leaflet for members who want to understand the consequences of pension liberation, which will be hosted by The Pensions Advisory Service website;
an action pack for pension professionals, including examples of what to look out for and example scenarios.
Pensions minister Steve Webb says: “Money in a pension is there for retirement and should not be released before at least the age of 55.
“The Government is investigating a number of schemes where firms appear to be preying on people when times are tight, and I am working closely with The Pensions Regulator to ensure rules are not being broken.”
FSA head of financial crime Sharon Campbell says people who try to access their fund early risk losing their entire pension pot through high charges.
She says: “Savers should be very wary of pension release schemes which often carry punitive, hidden rates of commission and where the promised investments may just be scams.
“They could end up losing all of their hard-earned pension.”