Guest blog from Malcolm McLean
I was recently asked to appear live on a regional TV news programme to talk about Pension Liberation and the perils and pitfalls associated with it.
My appearance followed on from a piece of film taken that day by the BBC involving a very bad case that had arisen in Liverpool. The unfortunate victim on this occasion was a man in his early fifties, a former cancer sufferer, who had lost the whole of his pension pot (£32,000) through a liberation scam. So frustrated was he about the inability of anyone including the police (Action Fraud) to apprehend the perpetrators and recover his pension monies that he had chained himself to the railings of a building in the city centre in protest. He said he intended to stay there on hunger strike and without his normal medication until he was cut free and forcefully removed. As I discovered later his protest may have had some effect in that all but £4,000 of his money was later recovered from the criminal gang responsible after further investigation and action by the police.
"We need to continue to warn savers through every means possible about pension liberation and what it means."
He was lucky – there are plenty of other examples where people have fallen for similar scams and been considerably less fortunate. Losing your pension in this way after years of scrimping and saving must be totally devastating and is why it is so important that the Government, the Regulators and the police all work together to confront this criminal activity head on.
We need to continue to warn savers through every means possible about pension liberation and what it means. There appears to have been something of an increase in this type of activity over the last few months and it is just possible that all the talk about the new pension freedoms following the last Budget and the opportunity to take cash out of your pension pot may have misled some members of the public into thinking pension freedom and pension liberation are one and the same thing.
They are certainly not but they do provide an opportunity for the liberators to strike. These are the totally unscrupulous firms that approach you to unlock your pension or access it early. They use misleading information, including offering personal loans or cash incentives to entice savers to cash in their pension pots. This almost invariably results in a poor outcome for the unsuspecting victims, putting some or all of their hard earned pension saving at stake. Additionally, they will also be liable to pay a tax bill of more than half of the money they access and may have to pay tax penalties as well.
We should spell out the contrast between pension freedom and pension liberation and ram home the message that save in the most exceptional circumstances you cannot take money out of your pension pot under the age of 55. Any suggestion to the contrary is almost certainly a scam and will cost you dear if you fall for it.
Chaining yourself to railings is a rather dramatic way of reacting and for most individuals will not help. But just imagine if it happened to you or a member of your family. How would you feel? Let’s sympathise with all the victims of pension liberation and do our utmost to prevent as many others as possible from falling in to the traps that may even now be being set for them.