Predators stalk your Pension…

…don’t let your pension become prey.

Following an alarming increase in Pensions Liberation cases over the past few years, we thought some further information on what this means, and what the consequences could be for you as a member of the Experian Retirement Savings Plan (ERSP), should be made available on the ERSP membersite.

Currently, the minimum pension age for Plan members is 55. Members are unable to access their retirement savings arrangements before this age in most cases, as stipulated by current pensions legislation. Pensions Liberation is where a Company will encourage you to transfer your retirement savings into another scheme, which promises that you will be able to release the money in your fund prior to the minimum retirement age. If you agree to this you could face a tax bill of more than half of your retirement savings. This is because the money that you save into your retirement pot is eligible for tax relief and the tax rules generally envisage that you will only receive this money at retirement. Hence, any money released early from your fund would be heavily taxed as a consequence.

Often members will lose the majority or all of their money through tax deductions, or to the companies that run these so-called scams. Companies often advertise ‘Pension Loans’ or cash incentives alongside misleading information to encourage savers to transfer their retirement savings.

In rare cases- such as terminal illness- it is possible to access funds before age 55 from the ERSP. But for the majority, promises of early cash lump sums are likely to be bogus and could result in serious tax consequences.

The Trustees are careful to identify potential pension liberation cases when processing transfer requests from members, however, these can be difficult to detect. The Pensions Regulator has published the following guidance for members when considering transferring their retirement savings to another arrangement…

What to watch out for…

!          Being approached out of the blue over the phone or via text message

!          Pushy advisors or ‘introducers’ who offer up front cash incentives

!          Companies that offer a ‘loan’, ‘saving advance’ or ‘cash back’ from your pension

!          Not being informed about the potential tax consequences

First steps to avoid becoming a victim…

• Never give out financial or personal information to a cold caller 
• Find out about the Company’s background through information online. All financial advisers  should be registered with the Financial Conduct Authority (FCA)
• Ask for a statement showing how your pension will be paid at retirement, and question who will look after your money until then
• Speak to an advisor that is not associated with the proposal you’ve received, for unbiased advice
• Never be rushed into agreeing a pension transfer

Remember, if you are unsure it is always best to seek financial advice before making any decisions about your retirement saving. You can find Independent Financial Advisors at www.unbiased.co.uk. For impartial information and guidance with regards to pension savings, visit www.pensionsadvisoryservice.org.uk.