Pension Regulator warns of £5 billion pension unlocking scam

Published:  30 Jul at 6 PM
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Crooks have conned pension savers out of a total of at least five billion sterling, according to an urgent warning issued by the UK Pensions Regulator.

Experts warn the full amount may be far higher, as many thousands of vulnerable pension savers in the UK and overseas are continuing to fall victim to an ingenious variety of scams by unprincipled conmen. Cold calls, text messages, glossy UK-based websites, sales patter and the pushing of worthless investments are all part of the ammunition used to part pensioners from their savings.

Unscrupulous firms use consumer ignorance of QROPS rules to claim that pensions can be unlocked before the age of 55, omitting to mention that tax losses and fines due to HMRC will claim up to 70 per cent of savings and their fees will take the majority of what’s left. A popular ploy is to persuade savers that legal loopholes can be used to transfer savings, but the recommended investments are bogus and result in the loss of the entire pension pot.

Online or home visit offers of ‘free pension reviews’ and the pushing of alternative investments such as overseas property, biofuels or student accommodation are all tricks to part pensioners from their life savings. Other cons include pension pots being used as collateral by commercial loan sharks, or the person-to-person lending of investors’ money to other pension savers.

The consequences of being scammed can wreck lives, with the media reporting suicides, lost homes and abject poverty and the crooks themselves mostly getting away with it. No financial authority redress is available to those who have used an unregistered company, and private legal action is extremely expensive.

According to Pension Regulator spokesperson Andrew Warwick-Thompson, his office sees victims losing their entire savings through falling for such schemes. Many victims are too embarrassed to seek help, says Michelle Cracknell of the Pensions Advisory Service, adding that anyone with doubts about an offered investment should contact her organisation for advice.
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