4 Common Pension Pitfalls To Watch Out For
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How To Avoid The Most Common UK Pension Advice Pitfalls
Pension problems can present themselves in a variety of shapes and sizes with the common tagline promising to convert worker’s hard earned pension savings into cash before their retirement. While thousands of people have already fallen victim to this scandal despite HMRC’s steps to curb and protect the interest of workers, there is the need to ensure that you are adequately equipped with the necessary information to ensure that you do not fall victim to these schemes.
With one in every ten people over the age of 55 reported to be targeted in the pension scandal since 2015, it is imperative that you learn what these pitfalls are so that you can avoid them early on.
Most Common Pension Mis-Guidance
Pension Liberation
As a worker with a pension plan, once you attain the age of 55, it is possible to access your pension and spend it however you want but if you choose to withdraw it earlier, you will be faced with high tax bills. However, some pension advisers target this time period to urge pensioners to withdraw their money before the age of 55. As part of the process, pension holders may sometimes be offered cash incentives which may be branded ‘pension loan’ or ‘saving advance’.
While this offer may appear tempting, there is the need to ensure that you tread carefully with anything related to pension liberation as it is highly unlikely to be profitable in the end. Many people who fall victims to this route are not aware of the tax implications of withdrawing their funds before 55.
Cold Calling Pension Schemes
Cold calling pension schemes occur when an individual contacts you randomly out of the blue and tries to convince you to move your pension savings into another investment. This type of scheme may come with some tempting deals and last minute offers which may include luxury properties and more. As part of the cold calling tactics, the cold callers may pressure you into making an immediate decision.
Use of the DWP and Other Official Names
Schemers may sometimes reach out to you via post. This method entails the sending of fraudulent letters from trusted companies such as banks and government bodies, including HMRC or the Department of Work and Pensions. The letters are aimed at compromising victim’s accounts by demanding sensitive information as part of an account upgrade process. In other cases, the letters may direct you to arrange for all your pension payments to be moved to a new bank account.
Annuity Schemes
An annuity is a product that can be purchased using the pension fund to guarantee a steady income throughout your lifetime. In some cases operators target those looking to invest in an annuity and try to convince them to buy inflated products or products that do not match the financial profile of the victim. In most cases, these annuity schemes are targeted at older savers with poor health status and those who are battling mental health related conditions such as Alzheimer’s disease. In some cases annuity schemes may offer a cash incentive or a signing bonus as part of the package.
Fighting Back Against Pension Schemes
To learn more about risky pension schemes and how to protect yourself from them, visit http://goodwinbarrett.co.uk/mis-sold-pensions/.
If you believe you may have been mis-sold a pension and would like to know more or talk through your situation, call one of our experts on 0808 296 2762 or email enquiries@goodwinbarrett.co.uk.
