Is your pension being exposed to scams?

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An email plonks into my inbox headed "Hello, there, Tony". That struck me as odd – not the sort of greeting my friends would use. But it had escaped my spam filter, so I had a look.

It came from Panama, a Central American tax haven which I have never visited. But the sender was evidently aware of me as the message said I was receiving the email because "you are a valued subscriber of our products".

That was news to me – I had never signed up for anything from Panama or bought anything from that country.

The need for income
Inevitably, it was about investment.

It said that "the need for income is a foremost concern of every saver and investor alike. Whether you are working and need to supplement your earnings, or retired and looking to add to your pension income, the need for income never goes away and with the current economic environment providing one of the most challenging on record the savvy investor finds alternative opportunities that meet all their requirements."

Really? I am not sure that income is the prime concern of all investors – someone young who has savings might be better advised to go for capital growth over the long term.

But leave aside that quibble. The Panamanian sender told me it was an alternative investment platform. It claimed unmatchable experience and a track record the rest of the world could only stand back and envy. It would offer me a series of unique investments which, it promised, would produce that magic combination of super security with substantial returns.

Claiming safety with way above average gains rings alarm bells. The most basic 'risk and return' investment rule states you can't have both . Still, a quick click brought me a range of "asset-backed" fixed term investments.

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Would you invest in a 'serial entrepreneur'?
These opportunities were exotic, to say the least. Among the offers was the chance to put from £7,500 into a social media site which I had never heard of.

A quick search engine check shows it was set up in the spring by someone whom the Panamanians describe as "a serial entrepreneur" - code for being a director of scores of companies, some of which are in liquidation or have been dissolved or struck off. The Panamanians name-checked one of the bust firms as one of the greatest investment opportunities of all time!

Income with security? Clearly not.

A second offer is solar energy in India. There is a promise of a fixed 14% for two years. After that who knows. Despite vague promises of a government of India guarantee, it could be that you get the return for two years and never see the rest of your money again.

The list goes on – social housing in Brazil, a sports broadcasting start-up in South Africa, and forestry in Costa Rica.

None of these can remotely be said to be secure. But all come with the re-assurance that they are "SIPP compliant", meaning they are approved by HMRC for inclusion in a self-invested personal pension.

Now this is true. But while the HMRC approval is intended to give confidence, these days there are effectively no rules and no bars on what can be included. It could be anything that a SIPP provider is prepared to accept. Many will only go for mainstream assets such as packaged funds and major shares, while others stretch to property, commodities, and even more minority interest investments.

You're being let down
And that concerns IFA firm London & Colonial. It is worried that pension savers are putting their retirement cash into esoteric investments, that the much heralded move to flexibility some years ago has created problems.

The firm believes that the trustees who stand behind all SIPPs are in breach of their duties by allowing exotic investments such as carbon credits, metals, and mineral rights.

The IFA's Adam Wrench says: "A SIPP is a trust and the duty of a trustee is to look after the benefits of the beneficiaries and to do that with prudence. The key question is would you recommend an investment to your gran?"

He added: "If people want to invest in esoteric investments they should do this outside of the trust as this pension money belongs to the trustee ultimately and the trustee must look after that until the beneficiaries kick in. You can't just gamble your pension money. You are not fulfilling the duties of a trustee if you allow that."

So remember what the adviser said. If it's not suitable for your grandmother's savings, then it is not suitable for you. You can't ever replace your pension savings if you bet them on a Panamanian promise.

If any of those investments turn out to be as billed, then I'll eat my hat. But not a Panama – they actually come from Ecuador.

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