Be pension wise

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Published: Sunday 12th April 2015 by The News Editor

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The pensions revolution is now under way, giving people aged 55 and over a new level of choice over what they do with their savings pots.

But, with thousands of people now having access to their lifetime savings, how good would you be at spotting a pension scam from an approach by a legitimate body?

The new rules mean that people with a defined contribution (DC) pension pot can take their money how they wish, subject to their marginal rate of income tax. Previously, they would have been herded towards using the pot to buy a retirement annuity, which would give them a regular income.

Everyone eligible for the freedoms is being offered free guidance to help them make sense of their choices under the Government-backed Pension Wise Scheme.

But while this is the start of a new era of choice for many people, it’s also a time which could see an increase in scammers trying to trick people out of their nest eggs.

Tony Neate, CEO of national internet security awareness initiative Get Safe Online, says: “In all walks of life there’s someone ready to give advice, particularly when it comes to big life decisions like what to do with your pension.

“But unfortunately some of the advice out there doesn’t have everyone’s best interests at heart.

“The new reforms will undoubtedly heighten the risk of being approached by people who aren’t who they say they are, looking to steal money from pensioners.”

Neate continues: “These types of criminals are clever, manipulative and will target their victims at a time when they are making big decisions about their future, whether that’s through unsolicited phone calls, emails, texts or even face-to-face conversations on the doorstep – they will try every way possible. Luckily, there are plenty of warning signs out there that can help over 55s keep their hard-earned money safe.”

As you mull over what to do with your pension pot, here are some warning signs of pension scams to watch out for:

:: You receive an unsolicited “cold call” over the phone, via email or text message or by a doorstep caller.

:: You receive unsolicited approaches about accessing your personal or company pension before you are 55 years old.

:: You receive unsolicited approaches about investing money released from your pension pot under the new rules.

:: You receive approaches claiming to be from the government offering retirement planning advice.

:: You are asked to provide your phone number, home address or personal financial information when you are only enquiring about products on offer.

:: You encounter pushy advisers or “introducers”, who offer up-front cash incentives or suggest “legal loopholes”.

:: You encounter companies offering a “loan”, or a “savings advance” or “cash back” from your pension.

:: You are encouraged to speed up the transfer process, including the “provider” using an express courier service for documents.

:: You are not told about the possible tax consequences of withdrawing your pension cash.

:: Documents are withheld from you, either with or without a reason given.

So how can you guard against pension fraud?

Talking to Pension Wise is a good start. A Pension Wise appointment will help you understand how to protect yourself from scams and report them if you see them.

Don’t hand over any personal details unless you’re absolutely sure that a company is legitimate and get as much information about the background of a firm as you can. You can check to see if an adviser is registered with the Financial Conduct Authority (FCA).

And finally, never be rushed or pressured into agreeing a pension transfer. Once the money is gone, it could be too late.

If you have concerns about being the victim of a scam, you can speak to the Citizens Advice Consumer Service on 03454 04 05 or the Pensions Advisory Service on 0300 123 1047.

Scams can be reported to Action Fraud via www.actionfraud.police.uk

Copyright Press Association 2015

Published: Sunday 12th April 2015 by The News Editor

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