Pension liberation firms tricking younger expat savers

Published:  24 Apr at 6 PM
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Warnings have emerged over pension liberation firms tricking savers under the age of 55 into cashing in their funds.

Companies are claiming that the new rules set out in UK Chancellor George Osborne’s budget speech allow pension savers under 55 year of age to get early access to their cash. It’s a new tactic by pension liberation firms targeting expat savers overseas as well as those living in the UK.

Legitimate pension providers are warning their clients that, should they take up the offers, HM Revenue and Customs will issue penalty demands of 55 per cent of the unlocked funds. The authority bases its percentage on the amount of pension contribution tax relief attracted by the fund, and charges levied by pension liberation firms average 33 per cent of the amount transferred, leaving retirees as little as 12 per cent of their savings intact.

The legal niceties of the issue are a black hole being exploited by pension liberation firms, who are telling pension savers that it’s unfair that 55-year olds can access their pension pots whilst those one year younger are forbidden to do so. There is no law preventing money being taken out of a scheme at any time, but fines are always imposed by the Inland Revenue as it’s considered a breach of pension rules.

Margaret Snowdon, chair of the Pension Liberation Industry Group, states that some firms are presenting their plans as government sanctioned, forgetting to mention that the new law does not apply to under 55s. Several pension liberation schemes have already been declared as fraud by the courts, and transparency is clearly becoming a problem.

According to Snowden, pension providers are already seeing an increase in retirement savers requesting fund transfers to providers willing to help access their cash. She adds that the group is putting together an industry code, aimed at both savers and providers, which clearly explains all rules regarding access to cash and possible penalties.
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