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Protect your pension – beware of scammers
20 June 2019

Protect your pension – beware of scammers

Pension freedom
The Government announced pension freedom in the 2014 Budget, which came into effect from the start of the 2015/16 tax year. This represented a major shift in how individuals may access their pensions. It meant that from age 55 anyone could take up to 25% of their pension pot as a tax-free lump sum, and have the following options for the remaining 75% of their pension pot:

  • Take it out immediately, or in lumps sums (subject to income tax at either 20%, 40% or 45%)
  • Purchase an annuity
  • Leave it invested and draw down as much or as little as you want as income
  • Purchase an annuity with part and leave the rest invested to draw down income

Pension freedom only applies to defined contribution (“DC”) arrangements.

As a member of the Lloyd’s Superannuation Fund (“LSF”) you cannot directly make use of pension freedom, as the LSF is a defined benefit (“DB”) pension fund. However, if the above options are of interest to you, you may gain access to pension freedom by transferring your LSF pension into a DC arrangement with another provider.

Transferring your pension from a DB arrangement could mean that you lose valuable benefits, such as a guaranteed income, and is not a decision to take lightly. It is important that should you wish to consider transferring your benefits to a DC arrangement you seek independent financial advice. You can find an independent financial adviser near you by looking on www.unbiased.co.uk.

Pension Scams
Greater freedoms to accessing pensions has subsequently led to an increase in pension scams and scammers have a variety of tricks to catch you out. They may claim you can access your pension pot before age 55, approach you out of the blue over the phone, via text message, email or in person door-to-door, entice you with upfront cash, offer a free “pension review”, or try to lure you in with so-called “one-off” investment opportunities.

The scammers may even pretend that the government has asked them to contact you. What they won’t tell you is that you’ll probably never see your pension savings again.

In 2017, statistics showed that victims of pension scammers lost an average of £91,000 each.

Cold-calling ban
In January 2019, the government introduced a ban on pensions cold calling. This meant that unsolicited calls about your pension became illegal with companies facing fines of up to £500,000 for breaking the rules.

If you receive a cold call about your pension, you can report it to the Information Commissioners Office on 0303 123 1113 or here.

If you think you have lost money to fraud, report it Action Fraud on 0300 123 2040 or here.

Protecting your pension
We urge all our members to continue to be vigilant about pension scams. Please be careful of any promises of up-front cash and one-off deals with high guaranteed investment returns.

The Pension Regulator has provided a booklet that you can download to provide you with simple steps to protect against scammers. You can download the booklet here.

You can also find further information about transferring your pension and pension scams via the following links:

www.pension-scams.co.uk
www.fca.org.uk/scamsmart/how-avoid-pension-scams
www.pensionwise.gov.uk
www.moneyadviceservice.org.uk
www.pensionsadvisoryservice.org.uk

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