£1m pensions feared to be locked away: Are you protecting yours?

Around £1m of pensions funds are feared to have been locked away, by a scheme that is refusing to allow customers aces to their money. The company, Fast Pensions, has had 18 complaints upheld against them over the past two years by the Pension Ombudsman, following a spate of customers reporting missing statements and non-communication from the firm.

Many had even used a ‘financial advisor’, who had talked them into cashing out all of their pension pot and investing it in Fast Pensions to earn more money. Since the company stopped responding to emails and phone calls, the ‘advisor’ appears to have vanished too. Reports of as many as 60 more people looking to complain could put the figure as high as £3m lost in total.

This is the latest in a series of sad stories of pension fraud, and should serve as a wakeup call to all of us that we should be doing more to keep our pensions safe.

Are you protecting your pension?

More than 10 million pensioners are being targeted by ‘cold callers’ every year, following the new pension freedoms that came into force in 2015. £10.6m of fraud losses were reported to police in the early stages of the freedoms, and it is estimated that the current figure could be as high as £42m lost to scammers to date.

The UK government touted a ban on cold calling for pensions products earlier this year, but it was not included in the Queen’s speech, so there’s no telling whether it’s still on the agenda. With no legislative support and incidents of fraud on the rise, what can we be doing in order to protect our pensions? Here are some tips:

  • Don’t deal with cold callers: Anyone who contacts you without invitation should be disregarded from the outset. This can include knocking on your door, calling you on the phone, sending an email or letter or even using text messaging to talk to you.
  • Not for under 55’s: Ignore any company who claims you can ‘liberate’ your pension under age 55. If you fall for it’ the best you’ll get is a tax bill for 55 per cent of the amount. At worst, you could end up with the tax bill and all your savings gone.
  • Don’t rush any decision: Transferring your pension is a one-time deal. Once it’s out of the scheme, you can’t put it back, so take your time and think carefully about what you’re planning to do. If the person you’re dealing with wants to rush you into a decision, cut ties with them and look elsewhere for advice.
  • Don’t invest in things you don’t understand: Stick to well-known investment streams which are based in the UK. Holiday homes in the Cayman Islands, recycling facilities in Nigeria and bio fuels in Indonesia should all ring alarm bells with you.
  • Avoid illiquid assets: Scams frequently lure pension holders into investments involving hotel rooms, parking spaces or storage facilities. These illiquid assets are very difficult to get your money back out of, and in most cases, are not suitable for pensions investment.
  • Watch for tell-tale language: Accredited financial advisors are not in the business of bending the rules, so if the person you are dealing with use words like ‘loophole’, ‘pension liberation’ ‘cash bonus’ or ‘one off investment’, ask yourself carefully if they’re the right person to be advising you.

Fraudsters have known since 2015 that you now have direct access to every penny of your pension, and will try every trick in the book to prise it out of your hands. The best way to avoid them is to seek your own advice with a financial advisor of your choosing. PensionWise is a free service to help you understand your options, and companies like us, at Integral Financial Planning, are here with in depth, honest advice, regulated by the Financial Conduct Authority.

Remember, if it sounds too good to be true, it probably is.