FCA in 'free pension review' alert

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%VIRTUAL-SkimlinksPromo%People being targeted by cold callers who are falsely claiming to offer new, free Government-backed retirement guidance could end up putting their money into risky investments and losing their pension savings, the City regulator has warned.

The Financial Conduct Authority (FCA) is alerting consumers to beware of phone calls, emails, text messages and online adverts offering them a "free pension review" and being encouraged to move their pension to "get better returns".
The regulator said it was hearing evidence that some callers were claiming to represent the Government after it announced plans in the recent Budget to offer impartial face-to-face guidance on the range of options people had available for their pension pots.

The guidance has not yet been launched and it will coincide with plans from April 2015 to give people aged over 55 the freedom to take their pension pot however they see fit.

The FCA said that as the new guidance initiative was still at the development stage, "claims to be linked to it are highly unlikely to be true".

The regulator said the reviews were designed to persuade you to move your money out of your existing personal or occupational pension into a self-invested personal pension (SIPP) or a small self-administered scheme (SSAS).

From there, the pension pot is then typically invested in unregulated investments such as overseas property developments, forestry or storage units.

Unregulated investments can be high-risk with returns that are potentially unreliable, and for most individual investors, putting pension money into unregulated investments is unlikely to be in their best interests, the FCA said.

Such investments were also often difficult to sell, the regulator added.

The FCA warned: "You could lose everything you invested, significantly reducing your retirement income."

Most of the companies making these offers were not authorised by the FCA, although the regulator said they also often falsely said they were acting on its behalf.

It warned that people investing in this way were also likely to have a lack of safety nets if something went wrong, including no right to complain to the financial ombudsman or to claim their money back from the Financial Services Compensation Scheme (FSCS).

The regulator said it was unlikely that the ombudsman or the FSCS would be able to help someone who lost money as a result of dealing with an adviser who was not FCA-authorised.

The FCA pointed out that authorised financial advisers who had their clients' best interests at heart were very unlikely to be offering such a service, as professional advice on pensions was not free.

Tracey McDermott, director of enforcement and financial crime at the FCA said: "People should be very wary if they are contacted out of the blue by someone offering a 'free pension review'.

"Most of the companies offering this 'service' are not authorised by us, and we're concerned that the reviews often end with pension pots placed in higher-risk, unregulated investments.

"If you see or receive offers of 'free pension reviews', just ignore them.

"If you are called out of the blue to discuss your pension, just hang up.

"Your pension is far too important to be put in the hands of a cold caller."

The FCA said people who were considering reviewing their pension arrangements should consider getting independent advice from an authorised financial adviser.

Consumers can check the adviser is authorised by the FCA and allowed to give pensions advice at www.fca.org.uk/firms/systems-reporting/register.

They can also ask firms for their "firm reference number" and contact details and call the firm back on the switchboard number given on the register rather than a direct line.

If there are no contact details on the register or the firm claims they are out of date, people can contact the FCA's consumer helpline on 0800 111 6768.

The FCA said if you have already moved your pension pot and have concerns, you should firstly take the matter up with any authorised firms that were involved.

The ombudsman might be able to help if you cannot get the matter resolved with the authorised firms.

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FCA in 'free pension review' alert
Figures from charity Age UK show that 29% of those over 60 feel uncertain or negative about their current financial situation - with millions facing poverty and hardship. Even though saving for retirement is not much fun, the message is therefore that having to rely on dwindling state benefits in retirement is even less so. To avoid ending up in this situation, adviser Hargreaves Lansdown recommends saving a proportion of your salary equal to half your age at the time of starting a pension. In other words, if you are 30 when you start a pension, you should put in 15% throughout your working life. If you start at 24, saving 12% of your salary a year should produce a similar return.
Many older couples rely on the pension income of one person - often the man. Should that person die first, the other person can therefore be left in a difficult position financially.
One way to prevent financial hardship for the surviving person is to take out a joint life annuity that will continue to pay out up to 67% of the original payments to the surviving partner should one of them die.

The disadvantage of this approach, however, is that the rate you receive will be lower. Again, the Pensions Advisory Service on 0845 601 2923 is a useful first port of call if you are unsure what to do.

Around 427,000 households in the over-70 age groups are either three months behind with a debt repayment or subject to some form of debt action such as insolvency, according to the Consumer Credit Counselling Service (CCCS).

Its figures also show that those aged 60 or older who came to the CCCS for help last year owed an average of £22,330. Whether you are retired or not, the best way to tackle debt problems is head on.

Free counselling services from the likes of CCCS and Citizens Advice can help with budgeting and dealing with creditors.

Importantly, they can also conduct a welfare benefits check to make sure you are receiving the pension credit, housing and council tax benefits, attendance and disability living allowances you are entitled to.


The average UK pensioner household faces a £111,400 tax bill in retirement as increasing longevity means pensioners are living on average up to 19 years past the age of 65, according to figures from MetLife. And every year in retirement adds an extra £5,864 in direct and indirect taxes based on current tax rates to the costs for the average pensioner household. You can be forced to go bankrupt if you fail to pay your taxes, so it is vital to factor these costs into your retirement planning.It is also important to check that you are receiving all the benefits and tax breaks you are entitled to if you want to make the most of your retirement cash.

The cost of a room in a care home in many parts of the country is now over £30,000 a year, according to figures from Prestige Nursing and Care. So even if the prime minister announces a cap on care costs - last year the economist Andrew Dilnot called for a new system of funding which would mean that no one would pay more than £35,000 for lifetime care - families will still face huge accommodation costs. Ways to cut this cost include opting for home care rather than a care home. Jonathan Bruce, managing director of Prestige Nursing and Care, said: "For older people who may need care in the shorter term, home care is an option which allows people to maintain their independence for longer while living in their own home and should be included in the cap." However, the only other answer is to save more while you can.
Older Britons are often targeted by unscrupulous criminals - especially if they have a bit of money put away. For example, many over 50s were victims of the so-called courier scam that tricked into keying their pin numbers into their phones and handing their cards to "couriers" who visited their homes. It parted consumers from £1.5 million in under two years. Detective Chief Inspector Paul Barnard, head of the bank sponsored dedicated cheque and plastic crime unit (DCPCU), said: "Many of us feel confident that we can spot fraudsters, but this type of crime can be sophisticated and could happen to anyone." The same is true of boiler room scams that target wealthier Britons with money to invest, offering "once-in-a-lifetime" opportunities to snap up shares at bargain prices. Tactics to watch out for include cold calling, putting you under pressure to pay up or lose the opportunity for good, and claiming to have insider information that they are prepared to share with you.

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