How to spot a fraudulent Pension Liberation Scheme

Published:  15 Nov at 6 PM
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Expats wishing to transfer their pensions have been alarmed by increasing reports of pension liberation scams operated by bogus financial advisors.

Consumers have been unable to identify whether the financial advisors they are using to liberate their pensions are genuine or fraudulent, with many deciding not to take advantage of the schemes as a result. Experts working with the pension regulatory body have now published a checklist of signs indicating a scam.

Questions directed at FAs should start with the time the recommended fund has been established, as most scams involve newly-registered businesses, and continue with a request for the registration number of the scheme. This can be checked online, as can the legitimacy of the company.

The advisor should provide proof of his qualifications and registration with the authorities, both of which can also be checked. Unregistered FAs are not allowed to sell pensions libration schemes.

Initial contact via a text or cold call is a major warning, as is an unscheduled meeting at a social event. If your advisor offers cash or a pension loan for a fast transfer, walking away is the best response, and if the receiving company is chasing the transfer via calls and emails alarm bells should ring and the transfer should be cancelled.

A recent High Court case found that many scam products were being set up as bona-fide companies via a registration loophole. Another point to remember is that the fees charged by many pension liberator advisors can amount to as much as 30 per cent of the value of the transfer, a tempting encouragement to mis-selling.

If the scheme you’ve been sold or are being offered is unregistered, tax penalties start at 55 per cent of the fund and can escalate to 70 per cent. At the present time there is no appeal.
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