Financial Scamming and Fraud

Pension Fraud and Pension Liberation Fraud/Scams
Pension liberation involves the transfer out of specific pension scheme benefits before retirement.
Pension liberation becomes pension liberation fraud when you are not informed of the potential
tax consequences involved and/or when some or all of your money is unable to be found.
Pension liberation scams see your money transferred into often high risk investment opportunities
which are frequently based overseas and are not regulated by the Financial Conduct Authority.
Without such regulation there is no protection should anything go wrong. These schemes
often claim to allow people to access to their money before they turn 55, with the promise of
“guaranteed” investment returns that are just too good to be true.
A cold call or email tempting an individual to
release monies under the following guises maybe
received:
• a ‘legal loophole’
• to ‘maximise the flexibility
available under the Government’s
new Pension Freedoms’
• an offer of a free pension review
Organisations offering these opportunities frequently refer to them as ‘pension loans’ and offer cash
incentives to sign over their pension benefits. A courier may be sent to the victim’s home address
with transfer documentation to sign. Many people are likely to sign the documentation whilst the
courier waits rather than having the papers reviewed and seeking independent advice.
It is not legally possible for people under 55 to access the money in their pension scheme, except in
rare circumstances, such as terminal illness. Whilst people do have the opportunity to transfer their
pension benefits pre-retirement into another authorised pension fund, independent advice should
be taken (including an actuarial calculation for transfers in excess of £30,000) to properly assess the
value of the benefits held and the possible risks of transfer.
What many people also do not know is that with the illegal early access to pension assets
substantial sums to HM Revenue & Customs (HMRC) will become due. Early access to pension assets
is considered an unauthorised payment by HMRC. A significant additional tax charge of 55% plus
interest is due on unauthorised payments and remains due even if the individual never received,
or cannot recover, the liberated funds. This is irrespective as to whether a fraud can be proven. This
‘double loss’ can have severe ramifications rendering the individual insolvent and facing bankruptcy.