The new pension freedoms will be an 'open season' for fraudsters

[Chittychangchang]

The new pension freedoms will be an 'open season' for fraudsters trying to steal people's savings, according to industry experts in the U.K.

Big changes - which will make it easier to access money in pension pots - are due to happen.

But some in the pensions industry are warning that those changes will also encourage criminal activity.

The government is advising people not to take cold calls from fraudsters posing as pension professionals.

Under the existing rules, fraudsters trying to access savings have needed to set up fake pension schemes, before persuading victims to transfer their money.

But from April 6 anyone over 55 will be able to withdraw their pension savings, and put them where they like.

"It's open season for the fraudsters," said Tom McPhail, pensions expert with Hargreaves Lansdown.

"They can target the over 55's, and some unwary investors are going to get drawn into these schemes."

'Devastating'

Previous pension fraud has centred on persuading people to "liberate" their pensions before the age of 55.

However criminals have already started to bombard people with phone calls and text messages ahead of the April changes.

Beverley Flavin, from Wolverhampton, was approached by a cold-caller.

She was then persuaded to hand over her £23,000 pension savings to a company which promised to invest it in a start-up venture.

However, the company subsequently went bust - and she does not know whether she will see any of her money back.

"It's devastating for me and my husband," she told the BBC.

"I really wouldn't like other people to be in the same situation I was in, and to have to lose everything."




A lot of people will have access to a lot of money come April, and there's a bunch of crooks out there
Steve Webb MP, Pensions minister

Pension Wise

Some in the industry want to see it made illegal for fraudsters to pose as regulated investment advisers - for example, by saying they are regulated by the Financial Conduct Authority (FCA).

The Association of British Insurers (ABI) also believes that the rules need to get tougher.

"We strongly support action to prevent savers becoming victim to fraudulent pension scams," said Yvonne Braun, director of long term savings policy at the ABI.

"The government, regulators and industry need to work together to combat misuse of the pensions system."

Pensions minister Steve Webb - who himself was cold-called by fraudsters - admits that there are risks involved with making pensions savings easier to access.

"A lot of people will have access to a lot of money come April, and there's a bunch of crooks out there," he said.
Pension freedoms to be 'open season' for fraudsters - BBC News

[harrybarracuda]

I am the son of the late Sonny Abacha and I have a pension fund that makes one million per cent a year. Please transfer your pension pot to me by Western Union to take care of this blessed bounty.

[VocalNeal]

Why would a sane government enact legislation that allow its citizens to be defrauded?

[Pragmatic]

Why would a sane government enact legislation that allow its citizens to be defrauded?

Possible ruling from the EU?

[Stinky]

Why would a sane government enact legislation that allow its citizens to be defrauded?

Why indeed, they're throwing away the.opportunity of doing it themselves.

[Pragmatic]

^^ No I'm wrong.

New Pension Rules 1: A summary of the April 2015 UK pensions reform and what it means to you

[Chittychangchang]

^
New Pension Rules 1: A summary of the April 2015 UK pensions reform and what it means to you



New UK pension regulations come into force on 6 April, giving you new options. Every Thursday and Monday, we report on exactly what this means to you, starting with this summary

In a matter of weeks, it’s out with the old and in with the new for pensions. Nearly every aspect of retirement saving has been revolutionised over the past year. The most important reform of all is that from April 2015 you can take as much cash as you like from a ‘defined contribution’ pension, with no obligation to buy an annuity.

New pensions freedom: save, spend or invest

The unprecedented pension freedoms give over-55s the power to spend, save or invest their money as they see fit:
•You could can treat your pension as a bank account, dipping in and out as often as you like and taking a quarter of it tax-free (with the rest taxed as income).
•Alternatively, you can keep the money invested and draw an income from it as you need (a process called drawdown).
•You may prefer to go down the annuity route and convert some or all of your money into a guaranteed income for life.
•Or maybe you want to cash in the whole lot and invest it somewhere else? The choice is yours.

“Pensions have finally caught up with real life. Now people in the UK can save for retirement in the knowledge that their pension savings can be used flexibly,” says Alan Higham, retirement director at Fidelity.

“The system we had was broken and loaded against the consumer. People were funnelled into buying an annuity, which was good in providing a secure income for life; but not much else.”

Why pensions change is needed

These reforms come off the back of stark warnings that almost 12 million people aren’t saving enough money for retirement. The government’s auto-enrolment programme, whereby employees automatically join their workplace pension unless they actively opt out, is a major step forward in encouraging a culture of long-term saving.

The new freedoms go one step further and, with the restrictions swept away, pensions are starting to look like a no-brainer for retirement savings.

You still get tax relief from the government on the money you pay in – boosting a £60 monthly contribution to £100 if you’re a higher rate taxpayer – not to mention employer-matched contributions if it’s a workplace pension.

The big difference is that under the new pensions system you get that money back under much more relaxed and tax-efficient terms from retirement age.

So, if you’re still working, you will be free to draw small chunks over time, which could reduce your tax liability entirely. Or you can take the cash and put it into alternative investments such as property, the stock market, cash savings, or anything else that takes your fancy.

Equally, many people will prefer to combine several solutions, perhaps blending an insurance-style product with a drawdown product.

The risks of greater pensions choice

The downside of greater choice and control over your financial future is greater responsibility.

The new system has risks, namely that people may make poor decisions with their new freedoms. This could result in some of us paying more tax than we need to, or ultimately running out of money altogether.

The government has committed to giving half an hour of free guidance through its Pensions Wise service (online, over the phone, or face-to-face), which is designed to help people navigate the new system. But this will only provide broad guidance, not specific advice. So it’s important for you to increase your own financial awareness.

The challenges of the pension reforms

Pension schemes won’t be ready One major stumbling block is whether employers will actually be ready to deliver the level of flexibility being offered under the new regime. There is still a question mark as to whether pension schemes will have the time or administration in place to offer bank account-style services by April.

If they aren’t, the only option may be for members to sit tight and wait, or transfer their pensions to a third party which could incur hefty charges.

You underestimate your life expectancy Even if this is plain sailing, there is a danger that people who are retiring will continue making the same mistakes. For starters, more than eight in ten of us underestimate our life expectancy. The truth is that we are all living much longer and feasibly some of us will be looking at 30 years in retirement, so careful planning is crucial.

Not maximising your income Hundreds of thousands of people also miss out on extra cash every year simply because they don’t look for the best possible income. If new retirement products come to market it’s important that you shop around and compare charges, in order to get the most out of your retirement savings.

Your investments can go down as well as up Investment risks and tax consequences cannot be ignored either. While money in low-risk assets such as cash may not maintain spending power, money that remains invested is vulnerable to the ups and downs of markets.

Withdrawing your cash too quickly When the time comes to start drawing benefits, if you withdraw cash too quickly you could be pushed into a higher tax bracket, which could be easily avoided with even the most basic tax planning.

A chance for investment scams

With around 300,000 people a year able to access their pensions on demand post-April, experts have warned that it could be open season for con artists. Dodgy firms promising stellar returns will have the perfect opportunity to persuade unsuspecting savers to invest their entire pension in illiquid, risky or fake investments.

Morten Nilsson of NOW: Pensions says: “The new pension freedoms give shady operators a golden opportunity to target vulnerable yet potentially cash-rich retirees with illegal, expensive or highly speculative investment propositions.

“In the worst case scenario, victims of these scams can lose some or even all of their retirement savings, leaving them having to live off a state pension and benefits for the rest of their days.”

Get regulated financial advice

With so many potential problem areas, professional help is a sensible route. If you’re only going to pay for regulated advice once in your life, retirement is the time to do it and an independent financial adviser (IFA) should be able to tailor a plan to your personal circumstances and tax position.

More importantly, there is redress through the Financial Services Compensation Scheme (FSCS) if they go bust or give you negligent advice.

[Chittychangchang]

I think the government in their infinite wisdom are trying to get the public spending more to boost the economy.

[nigelandjan]

True ^ tut tut how cynical ,, however I agree

Truth is the stupid bastards will spunk it up the wall on worthless shit and then come back wailing to the government they are out of money and need help .

Another stupid vote catching idea

[Jesus Jones]

Why would a sane government enact legislation that allow its citizens to be defrauded?

Because when the banks steal peoples' money again, they'll say "we warned you!"

[BobR]

Why would a sane government enact legislation that allow its citizens to be defrauded?

Because when the banks steal peoples' money again, they'll say "we warned you!"

The worst part is what are they going to do with those who pull out their pension money and either make a good faith bad decision with it, or blow it outright? I doubt if Britain is ready for people begging in the streets or starving, meaning the Government will need to rescue them somehow.

In Pattaya, someone pulling out their pension will be enough to put them on suicide watch.

[Exit Strategy]

Wheres the delete button? this is so 20 years old crap. Yeah I got mate in Nigeria who urgently needs some cash payment to secure transfer of millions to UK - anything you have is enough,

Yeah right,
Oh just as as customer advirsely that was all a joke so please stop calling me,

[Exit Strategy]

Yeah I got mate in Nigeria who urgently needs some cash payment to secure transfer of millions to UK - anything you have is enough,

Yeah right,
Oh just as as customer advirsely that was all a joke so please stop calling me,

[Exit Strategy]

Why would a sane government enact legislation that allow its citizens to be defrauded?

Possible ruling from the EU?

Not less than likely as it happens all the time, with telecoms, service industries or mostly anything benefiting big French and German companies.