How To Spot A Pension Liberation Scammer

Pension liberation fraudsters are still trying to persuade retirement savers to hand over their pension cash despite an ongoing campaign by regulators to outlaw the scam.

In a bid to help pension investors avoid rogue advisers, HM Revenue & Customs (HMRC) has recently released a list of indicators that identify an adviser as a scammer.

Pension liberation is a fraud that lures savers into unlocking cash from their retirement funds before they reach the age of 55.

Here are some of the tricks scammers are using, says HMRC:

  • Phoney offers – if an adviser mentions terms such as a free government pension review, HMRC approved, legal loopholes or special overseas investments, then the offer is likely to be a scam.

Free reviews are not offered by HMRC or the government and are just hooks to capture unwary investors

  • Cold calls – Regulated pension advisers are not allowed to randomly call consumers or to send them unsolicited texts by mobile phone.

Anyone receiving cold calls should ignore the message as they are from unauthorised advisers

  • Overseas investments – Switching cash offshore makes tracing the money almost impossible. Pension liberation fraudsters often suggest investing in overseas property or other esoteric investments like carbon credits and sustainable timber plantations
  • Early access to pension cash – HMRC says the only way someone can access pension cash before they are 55 years old is if they are terminally ill. Younger savers can withdraw their funds, but this attracts a tax penalty of at least 55% of the money transferred out
  • Lack of a paper trail – Regulated advisers must give consumers projections and key feature documents while going through ‘know your customer’ and money laundering procedures. If the pension deal does not have a paper trail, the adviser is a fraudster
    • Speedy money transfers – If advisers urge victims to speed up transfer of their money to a new scheme, they are probably after the cash
  • Pension loans – Any arrangement involving a loan of pension cash is likely to be a scam

Although the number of rogue liberation schemes has fallen since HMRC changed the procedure for setting up a pension, some fraudsters are sending out thousands of emails and texts to net victims.

“Few people can access a pension before they are 55 and any promises that a firm makes suggesting that this can be done is likely to be illegal,” said an HMRC spokesman.