UK pension plans are governed by a wide range of HMRC rules about contributions, tax treatment and benefits.
One of the rules that needs to be considered is that the minimum age at which you can start to enjoy the benefits of your pension plan is age 55.
There are only a limited number of circumstances (typically serious ill health) where it might be possible to take benefits before that age.
The Times last week reported that City of London Police have made arrests in respect of a scam aimed at vulnerable people to “unlock” their pension plans. This is also known as “pensions liberation”.
When we are faced with an economic environment such as the current one with rising costs of living it can only be too tempting to try to access benefits from an arrangement that might typically only be available many years into the future.
As the newspaper reported, thousands of people have been tempted into moving their money from legitimate pension plans into schemes that were either very high risk or non-existent.
As much as £400 million may have been scammed this way.
How might you best avoid being scammed?
-Only ever deal with an adviser who is authorised and regulated by the Financial Conduct Authority (FCA) You can check the Financial Services Register register of such advisers at www.fca.org.uk.
-Only ever invest your pension fund in authorised and regulated collective funds (these again are registered with the FCA).
-Make sure that you get full and complete disclosure of all the charges that will be applied to your pension fund.
-Get a second opinion. Ask another adviser not for more advice but just to confirm the nature of the recommendation, is it authorised and regulated and not in breach of any HMRC rules? (A tax charge of 55% could apply to unauthorised investments and payments)
Be cautious – it is better to miss a real investment opportunity than to be scammed out of your hard earned pension fund.
