Our brush with a pension liberator and 7 tips for dealing with them


Scam Computer Keys Showing Swindles And FraudThe word ‘liberation’ is generally thought of as positive; indeed one online dictionary defines it as “the act of setting someone free from imprisonment, slavery, or oppression.” However, put the word ‘pension’ before it and the meaning changes completely.

The pattern is all too familiar. It often starts with an unsolicited text followed by a phone call from the ‘pension liberator’, when they will try to persuade unsuspecting consumers to transfer their existing pensions into a new plan, often with the promise of a large upfront cash incentive and outrageous promises of better performance.

Our Marketing Manager, Phillip Bray, recently received a call from a ‘pension liberators; and it got us thinking, what should you do if you receive such a call?

First things first though, what was Phillip told when he picked the phone up?

Final salary pension v Brazilian land investment

The call came through on an otherwise dull Monday afternoon. Sensing an opportunity to see how the pension liberators work, Phillip played on, telling the caller he had £80,000 in a local authority, final salary pension, which he was no longer paying into. Not true of course, but we don’t think there’s anything wrong in a little poetic licence for the greater good of outing this charlatans!

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The call went like this:

  • Billy, from a “marketing firm” was the first person Phillip spoke to
  • Billy was keen to impress upon Phillip that despite him holding a final salary pension that it was “not performing as well as it could be” and that “he could lose money in a final salary pension”
  • When pressed Billy didn��t know whether the firm he worked for was regulated or not; after all he’d only been there for two weeks!
  • Billy passed Phillip onto another lady from a different company, who could tell me more about my options, let’s call this lady Jane
  • Jane proceed to tell Phillip he could transfer his pension into a SSAS (Small-Self Administered Scheme), which would then invest in “Brazilian land” returning “15 – 20% per year” over the next five years
  • Jane proceeded to tell Phillip that a regulated firm was involved. However, on further investigation after the call, it became clear that none of the firms involved were in fact regulated by the Financial Conduct Authority (FCA)
  • Finishing the call Jane promised to email a brochure, which she did, and proceeded to say she’d dealt with a “few final salary transfers”, so it was definitely possible to release some cash from the scheme

Now, we should make clear that a SSAS can be a perfectly good way of planning for your retirement. However, recommending a transfer from a gold plated, index linked and guaranteed final salary pension, into a Brazilian holiday development, certainly is not!

Serious lessons

As an ex-Independent Financial Adviser, Phillip was never going to get hoodwinked by a pension liberator, even with a glossy brochure, a promise of 15 – 20% returns each year and an £11,000 kick back. In fact the term ‘too good to be true’ springs to mind.

But, there are people who have transferred money out of otherwise excellent pensions, many of which offer inflation proofing and guarantees. So, what should you do if you get a call from one of these firms, or indeed any firm offering to review your pension?

1. Firstly, don’t respond to unsolicited texts, this will vastly reduce your chances of getting a call

2. If you are unlucky enough to be cold called the simple answer is to hang up. Responding to a cold call is no way to find a reputable Independent Financial Adviser. Far better to ask for a recommendation from friends or family or use www.unbiased.co.uk

3. If you really must speak to a cold caller make sure they are regulated by the Financial Conduct Authority (FCA). Ask the firm for their full name and their Firm Reference Number or FRN for short, and then check them out on the FCA register, which you can find by clicking here

4. If a firm offers you access to your pension before the age of 55 then walk away. HMRC has made it abundantly clear, that short of contracting a terminal illness, there is no way you can get access to your pension before 55. In a recent press release HMRC confirmed there are no loop holes, no matter what you are told. Furthermore, if you do take money from your pension before you are 55, expect a knock on the door from the taxman, who will happily relieve you of up to 70% of the amount you have received, even if you’ve already spent it!

5. Similarly, if you are offered returns of 15 – 20% per year walk away. There is no way it is possible to consistently deliver such large returns in the current economic climate. In fact, before you invest we’d suggest you look up one Charles Ponzi or his later day incarnation, Bernard Madoff

6. If you feel that your pension might be underperforming and there are many which could be doing better, then seek out an Independent Financial Adviser (IFA) and pay them to advise you on your options. A good quality adviser will not only talk to you about charges and performance, but look at other areas too, including your long term financial planning, to make sure you can enjoy a comfortable retirement. Please don’t risk your financial future on commission hungry salesman

7. In these tough economic times many people are struggling to make ends meet and the lure of a few thousand pounds now, from a pension which won’t be available to you for many years, will undoubtedly be strong. This is what ‘pension liberators’ prey on. If you are having a hard time, consider other options including debt counseling from Step Change who will give you free and impartial advice, unlike many debt management companies

Hang up and get professional advice

If an investment sounds too good to be true, the firm offering it isn’t regulated and they have to bribe you to invest, then it’s time to walk away and get some decent independent advice.

If you get one of these calls our advice would be to politely hang up, we’d hate for you to have a poorer retirement.

If you’d like help planning for your retirement our team of Independent Financial Advisers are here to help you. Why not call one of our team today on 0115 933 8433, alternatively enquire online or email info@investmentsense.co.uk