Pension savers urged to 'scam-proof' their income

'Scam-proof' your pension savings

Pension savers are being urged to "scam-proof their savings" as part of a campaign launched today ahead of changes which will give people the freedom to use their retirement pots like a bank account.

The Pensions Regulator has refreshed its "scorpion" campaign to alert retirement savers and pension scheme trustees to the risks of people being tricked by out of their money by cold calls and texts promising a "free pension review" or mentioning a "legal loophole".

To date, people aged under 55 have been the primary target for stings which promise the ability to release their pensions as loans or upfront cash.

But, from April 6, new flexibilities will give people aged 55 and over more freedom over how they access their pension pot. Instead of being forced to buy a retirement annuity with their pot, they will be able to take money out in one go or in a series of slices. People using the new freedoms will be charged their marginal rate of income tax.

The campaign warns that scammers will try to flatter, tempt and pressure victims into transferring their pension fund into an investment with attractive and often unrealistic returns. Once the victim has signed the forms and the transfer has gone through, they are unlikely to see their money again and they could be left with a hefty tax bill.

Free, impartial guidance will be provided to help people understand the pension reforms. The guidance, which is being provided by Citizens Advice and the Pensions Advisory Service, goes under the banner Pension Wise.

The Pensions Regulator said people approaching 55 may be contacted by scammers seeking to exploit people's interest in the change in law and it said pension scheme trustees should encourage members to contact Pension Wise.

Pensions Minister Steve Webb said: "You can spend years saving into a pension only to find yourself tricked out of your money in the blink of an eye by these unscrupulous crooks.

"We are taking tough action along with our partners to tackle this scourge, but people must be vigilant. To get genuine guidance on your options, people should contact the free and impartial Pension Wise service.

"If you are cold-called by someone offering you a free pensions review, it's probably a scam so put the phone down."

The Pensions Regulator's chief executive Lesley Titcomb said: "The people behind pension scams are often agile, sophisticated and organised. Whatever the law is, they will seek to exploit it - so we expect the scams we see to continue to evolve in light of the new flexibilities available.

"Arm yourself with the right information and never make a hasty decision. Once the transfer has gone through, it's too late."

As well as using the Pension Wise service, pension savers are advised that if they are approached, they should check that their adviser is registered with the Financial Conduct Authority (FCA).

If people are concerned, they can contact the Pensions Advisory Service on 0300 123 1047 or if they have already accepted an offer, they can report it to Action Fraud at

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Pension savers urged to 'scam-proof' their income

If, like many Britons, you have failed to save the cash you need to maintain a comfortable standard of living in retirement, one option is to sell your home and downsize to a smaller property, using the money leftover to cover your living costs.
If moving out of the family home is too much of a wrench, however, the good news is that equity release schemes allow you to stay in your house or flat while still using the equity built up in it to provide some extra cash. The downside of the schemes, which work a bit like mortgages, is that you may not have much left to pass on to any children or other relatives.
But that's a small price to pay for a reasonable standard of living. For more information, try Age UK on 0800 169 6565.

Choosing the right annuity can have a significant impact on your retirement income. And as with most pensions, you automatically have what's called an 'open-market option' (OMO), you can scour the market for the highest annuity rate.
It is worth checking what your pension provider is offering first, though, as some companies offer guaranteed rates for existing customers that are likely to beat those available elsewhere. The Pensions Advisory Service on 0300 123 1047 is a good place to get some free advice.

On retirement, most people convert their pension fund into a guaranteed income annuity that pays out the same amount every month for the rest of their lives.
However, you can also choose an increasing annuity that pays out smaller amounts in the first few years but offers larger payments further down the line. This may prove a wise move if the rate of inflation remains at over 2%.

It is now easier to work later in life because the "default retirement age" has been scrapped.
People approaching retirement age and worrying about money can therefore choose to work for a few years longer - potentially transforming their financial situation. Other than the extra income from working, these people can look forward to higher state pensions, and higher annuity rates due to their greater age.
They can also benefit from bigger tax allowances and the fact that they no longer have to pay National Insurance contributions. Check out this nidirect website for more details.

You could get a much better rate with an impaired-life annuity if you have a medical condition that is likely to reduce your life expectancy.
Incredibly, even snoring, which is a common symptom of Sleep Apnoea could have an impact.
According to figures from MGM Advantage, a man with this condition could receive an extra £12,000 retirement income over the course of their retirement - or £571.44 extra money each year. Click here to find out more.

To maximise your retirement income, it is vital to ensure that you are receiving all the benefits to which you are entitled. These include the basic State Pension, and in some cases, the additional State Pension.
If you are on a low income, you could also qualify for the guaranteed element of Pension Credit, while those with some savings may get the savings element of this benefit. For more information about these and other benefits such as the Winter Fuel Payment, click here.

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.


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