The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald
The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald.
By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.
Pensions have been a big conversation topic in the world of tax and accounting.
Last week, we focussed on the imminent changes to auto enrolment for pensions and what it all means for employers.
This week, the spotlight goes onto pensions scams.
Sadly, cons where people may be tricked into handing over their pension pots by scammers, are on the increase.
Many of the offers seem very convincing, starting with offers of excellent returns.
However, once you’ve transferred your money into a scam, it’s too late.
You could end up losing all your pensions savings and in some cases face a tax bill of up to 55%.
Here are a few tips to help you give yourself the best possible protection against the pension scammers.
Before you sign anything . . .
Never be rushed into making a decision, contact the Pensions Advisory Service TPAS on 0300 123 1047
If you have already accepted an offer . . .
Report it to Action Fraud on 0300 123 2040
Before you agree to anything . . .
Make sure the adviser is approved by the financial conduct body FCA
Understand your options . . .
Pension Wise, a free and impartial government service, offers guidance to those age 50 and over on defined contribution pensions. To understand your options, go to Pension Wise.
How to spot the warning signs -
Scammers don’t care whether you’re an inexperienced investor or have never put your money anywhere other than a bank.
They will try to flatter, tempt and pressure you into transferring your pension fund into, for example, an investment with guaranteed returns.
Once the transfer has gone through, it’s too late. Remember, the only people who benefit from scams are the scammers themselves.
Here are some of the most common tactics used by pension scammers to get a hold of your pension savings:
- A cold call, text message, website pop-up or someone coming to your door offering you a ‘free pension review’, ‘one-off investment opportunity’ or ‘legal loophole’.
- Convincing marketing materials that promise you returns of more than 8% on your investment.
- Paperwork delivered to your door by courier that requires immediate signature.
- A proposal to put your money in a single investment. In most circumstances, financial advisers will suggest diversification of assets.
- They may claim that you can access your pension before age 55.
- Transfers of your money overseas.
Pension scams can be given a number of labels including: free pension review, one-off investment opportunity, legal loophole, pension loans, early pension release, pension selling, cashing in your pension and pension liberation.
Is 'pension unlocking' a scam?
Pension unlocking is not a scam. With pension unlocking, a person aged 55 or over can release up to 25% of their total pension as a tax free lump sum.
Unlocking your pension will almost certainly mean you will have less income in retirement and, as a result, unlocking is only suitable for a very limited number of people and circumstances.
Scamproof your savings -
Millions of people fall victim to scams every year. The tactics used by pension scammers to encourage people to transfer their pension savings to them is constantly changing.
Some of the tactics used by pension scammers include offering free pension reviews, health checks and promises of better returns on their savings, pension loans, upfront cash or other promotions to tempt them. Most of these are bogus.
Some scammers are also directing members to transfer their pension savings into small (often one or two member) occupational schemes in an attempt to escape scrutiny from regulators.
Trustees and business advisers play a crucial role in helping to stop scams because they can arm members with the information they need to protect themselves (and their pension savings) from the scammers.
If members know how to recognise a scam and what do to if they suspect a scam, they can prevent an entire lifetime of savings being lost.
You can find out more about money matters on the new-look Clay Shaw Butler website (under our news for business section) -
We have a strong and experienced team with great local knowledge all geared-up to helping you get the very best from your finances – whether that is as an individual or as a business.
We stay ahead of the game by putting great store by continual professional development for our staff.
With Investors In People status at Clay Shaw Butler, we care passionately about making sure our staff have all the tools they need to serve you, our customers.
The team at Clay Shaw Butler can be contacted on 01267 228500.
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