Your pensions scheme can't protect you from fraudsters

stop sign against deep blue sky....

If you're of a certain age then the chances are you've got a pension and also a chance that you may have been contacted by a pension liberation company, offering you access to your money before age 55.

You may have even thought about releasing the cash, or been told by an unscrupulous liberator that they work for a government-approved liberation scheme (they don't because there's no such thing).

It's not illegal to liberate your pension savings but it will cost you a lot in terms of commission (up to 25% of the pot) and tax (up to 55% of the pot) but consumers don't always get told this.

I'd always thought the last line of defence for saving the pension of someone being hoodwinked by a liberation scheme would be their pension company. I assumed that your pension company would chip in and refuse to transfer your hard-earned and hard-saved cash to a con man. But they're not allowed. It turns out that pension schemes have a duty to transfer pension money to another pension on the request of the saver. They have three months to do this and have to transfer even if they suspect the person is moving to a pension liberation scheme and may lose all their cash.

The best defence the transferring scheme has is to stall and delay the transfer and hope the liberation company gets found out in the meantime but they can only do that for three months.

This is a huge concern. There are thousands of people who have fallen prey to pension liberation and government estimates puts another £600 million of savings at risk.

You could argue it's buyer beware and that if people are gullible enough to fall for this dirty trick then that's their look out but these companies can be very persuasive, very demanding, and very frightening to deal with for many people who end up giving in to stop the hassle of daily phonecalls.

The government is thinking of consumers' best interests when it requests transfers are done within three months but there needs to be some common sense about stopping transfers to potential fraudsters.

It's not often I side with pension companies but it seems that they should be given more powers to halt suspect transfers it may just save someone's savings and save them from an old age spending in poverty.
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