SIPPs: Regulators tighten the net around pension liberators


The Pensions RegulatorThe Pensions Regulator (TPR) has announced plans to tackle the growing number of pension liberation schemes.

Pension liberation is the relatively harmless sounding name given to the pernicious practice of helping people access their pension before the age of 55, the earliest at which the vast majority of pensions can be taken.

In December 2011 the High Court ruled that schemes which allowed people to access their pension before the age of 55 was illegal. However, despite this the amount of money being paid into such schemes has soared to £400 million over the past four years, with people often tempted to try and access their pension perhaps to repay debt or help out during a period of unemployment. The pension liberation companies also play on people’s general mistrust about pensions.

The ‘Predators stalk your pension’ campaign is due to launch on 14th February and will set out the things providers and members need to look out for to help stop them becoming victims of fraud.

Have you been a victim of a pension scam or been contacted by pension liberators?

If so we want to hear from you, contact Phillip Bray at Investment Sense

0115 933 8433

Pension liberation scams

The scams normally start with an unsolicited text or email, often targeting the less well off, people in financial difficulties or deferred members of work place pensions.

From the initial contact there seems to be a number of different variations, including scheme members being lent money from their pension and high risk investments being bought with commissions being paid back to the member.

All the schemes have a number of things in common though, charges are high, a tax charge of up to 55% – 70% of the amount liberated is likely to be due, and the member will be significantly worse off in retirement having seen a large proportion of their fund disappear in fees, charges and tax, often leaving nothing to provide an income in retirement.

Stopping transfers

The new plans from TPR will pull together various agencies including the Serious Fraud Office, the Home Office and the Serious Organised Crime Agency.

In a new move, the regulator is calling on pension providers to stop pensions being transferred to schemes which they believe will be used for liberation purposes, furthermore, all pension transfer documentation will also include a new warning leaflet.

Speaking about the new campaign, Bill Galvin, Chief Executive of the Pensions Regulator, said: “The pensions industry needs to do what it can to protect members from these offers. There can be a huge sting in the tail for those that are tempted by the sales patter.”

Galvin continued: “Providers who don’t carry out due diligence before processing a transfer may be placing members at high risk – and also exposing themselves to significant reputational damage.”

Avoiding a scam

Financial experts believe there are a few simple steps people can take to avoid being taken in by pension scammers.

Firstly, people should not be taken in by pension liberators who promise easy access to a pension before the age of 55. The High Court has already ruled that such schemes are illegal, and should therefore be avoided at all costs, no matter how tempting they may look to be.

Secondly, advice should always be taken from an adviser regulated in the UK by the Financial Services Authority (FSA); consumers can check easily on the FSA register whether a firm offering you advice is suitably authorised. Click here to visit the FSA register.

Thirdly, people should avoid investing in assets which are not regulated by the FSA. Many pension liberation schemes involve people investing in highly risky and unregulated assets including bio fuels, forestry and land.

Finally, people should remember the old adage, if something looks too god to be true then it probably is.

If you have been a victim of a pension scam or been contacted by pension liberators we want to hear from you call Phillip Bray at Investment Sense on 0115 933 8433, alternatively email