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| Pensions cash 'predators' warning from regulator | Pensions cash 'predators' warning from regulator |
| (about 9 hours later) | |
| Consumers are being warned against "predators" who entice them to cash in their pension fund before retirement. | Consumers are being warned against "predators" who entice them to cash in their pension fund before retirement. |
| Pension liberation schemes encourage people to access their pension savings before the age of 55. | Pension liberation schemes encourage people to access their pension savings before the age of 55. |
| But a campaign, launched on Thursday, highlights the high tax charges and fees that can erode the pension pot of anyone who signs up. | But a campaign, launched on Thursday, highlights the high tax charges and fees that can erode the pension pot of anyone who signs up. |
| The Pensions Regulator said up to 70% of funds can go to the tax authority, and schemes may charge high fees. | The Pensions Regulator said up to 70% of funds can go to the tax authority, and schemes may charge high fees. |
| This is because pension saving is tax privileged, under the proviso that the funds are not touched until the saver reaches the age of 55 at least. | This is because pension saving is tax privileged, under the proviso that the funds are not touched until the saver reaches the age of 55 at least. |
| So, by drawing on these funds early, HM Revenue and Customs (HMRC) will take a significant chunk of the funds. | So, by drawing on these funds early, HM Revenue and Customs (HMRC) will take a significant chunk of the funds. |
| "Tax relief is given on pension savings to encourage individuals to save for the long-term to provide them with an income in retirement," said HMRC's head of pensions business, Graeme Hood. | "Tax relief is given on pension savings to encourage individuals to save for the long-term to provide them with an income in retirement," said HMRC's head of pensions business, Graeme Hood. |
| "HMRC is committed to ensuring savings built up with the benefit of generous tax reliefs are not misused." | "HMRC is committed to ensuring savings built up with the benefit of generous tax reliefs are not misused." |
| Spam texts | Spam texts |
| The operators of pension liberation schemes tend to work in the grey areas of the law, according to the regulator. | The operators of pension liberation schemes tend to work in the grey areas of the law, according to the regulator. |
| Introducers to the schemes, or advisers, use text messages, cold calls, or website promotions to encourage people to access their "frozen" pension. | Introducers to the schemes, or advisers, use text messages, cold calls, or website promotions to encourage people to access their "frozen" pension. |
| They might suggest that people take a loan from the scheme provider, secured on their pension funds. Alternatively, the money might be transferred from the pension scheme into risky, unregulated investments often based overseas, the regulator said. | They might suggest that people take a loan from the scheme provider, secured on their pension funds. Alternatively, the money might be transferred from the pension scheme into risky, unregulated investments often based overseas, the regulator said. |
| The scheme operators take a fee of 10% to 20% of the amount transferred. | The scheme operators take a fee of 10% to 20% of the amount transferred. |
| "The pensions industry needs to do what it can to protect members from these offers," said Bill Galvin, the Pensions Regulator's chief executive. | "The pensions industry needs to do what it can to protect members from these offers," said Bill Galvin, the Pensions Regulator's chief executive. |
| "There can be a huge sting in the tail for those that are tempted by the sales patter." | "There can be a huge sting in the tail for those that are tempted by the sales patter." |
| On Saturday, BBC Radio 4's Money Box programme reported that individuals have given pension liberation schemes an estimated £400m since 2008. | On Saturday, BBC Radio 4's Money Box programme reported that individuals have given pension liberation schemes an estimated £400m since 2008. |
| The awareness campaign, featuring a scorpion, will include information leaflets for members of pension schemes, and checklists for pension providers. | The awareness campaign, featuring a scorpion, will include information leaflets for members of pension schemes, and checklists for pension providers. |
| The regulator's powers include taking legal action to secure the assets of schemes that are found to flout the rules. | The regulator's powers include taking legal action to secure the assets of schemes that are found to flout the rules. |
| It is encouraging anyone who is approached by one of these scheme's representatives to take care. Anyone who believes that they have been misled by a pension liberation fund should report the case to Action Fraud. | It is encouraging anyone who is approached by one of these scheme's representatives to take care. Anyone who believes that they have been misled by a pension liberation fund should report the case to Action Fraud. |
| Have you been affected by pension liberation schemes? Send us your comments and experiences using the form below. |