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Websites frozen in pension campaign | Websites frozen in pension campaign |
(about 11 hours later) | |
Eighteen websites have been suspended and arrests made during a campaign, being revamped on Thursday, against pensions cash "predators". | Eighteen websites have been suspended and arrests made during a campaign, being revamped on Thursday, against pensions cash "predators". |
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 the campaign, run by the Pensions Regulator, highlights the high tax charges and fees that can erode the pension pot of anyone who signs up. | But the campaign, run by the Pensions Regulator, highlights the high tax charges and fees that can erode the pension pot of anyone who signs up. |
It said money tied up in these schemes amounted to at least £495m. | It said money tied up in these schemes amounted to at least £495m. |
This figure has grown as operators use text messages, cold calls, or website promotions to encourage people to access their "frozen" pension. | This figure has grown as operators use text messages, cold calls, or website promotions to encourage people to access their "frozen" pension. |
Raids | |
The campaign was first launched in February 2013, and the Pensions Regulator has applied to the courts to freeze assets in 20 schemes. | The campaign was first launched in February 2013, and the Pensions Regulator has applied to the courts to freeze assets in 20 schemes. |
Action by the National Crime Agency has resulted in 18 pension liberation websites being suspended, and raids by the City of London Police in May led to seven arrests. | Action by the National Crime Agency has resulted in 18 pension liberation websites being suspended, and raids by the City of London Police in May led to seven arrests. |
Pensions minister Steve Webb said: "Although quick-fix pension release schemes may seem tempting, particularly when times are tough, people should make sure they understand all the implications before they sign on the dotted line. | Pensions minister Steve Webb said: "Although quick-fix pension release schemes may seem tempting, particularly when times are tough, people should make sure they understand all the implications before they sign on the dotted line. |
"A joint industry and government operation is working to stamp out these unethical, exploitative, poor value offers - but I would urge anyone who is approached to think carefully, consider seeking advice and, if in doubt, steer clear." | "A joint industry and government operation is working to stamp out these unethical, exploitative, poor value offers - but I would urge anyone who is approached to think carefully, consider seeking advice and, if in doubt, steer clear." |
People can only access their pension before the age of 55 without a tax charge if they are in serious ill-health. | |
Fees | |
Pension liberation schemes - working in a grey area of the law - operate by suggesting to people that they 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 Pensions Regulator said. | |
However, up to 70% of any funds released from a pension early can go to HM Revenue and Customs (HMRC). | |
These liberation scheme operators can also charge high fees, often between 10% and 20% of the amount "released", leaving people with a small sum and no financial backstop for their retirement. |
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