Although pensions are an endlessly interesting subject to write about (no, honestly), I’m well aware it isn’t the most exciting news beat out there for a journalist. I’ve seen enough eyes glaze over while attempting to explain liability driven investment for the tenth time to know that much.
This momentarily changed this week when on Wednesday morning detectives from the National Lead Force for fraud raided an office in the City of London housing around 40 call-operatives, arresting three men suspected of heading an organised gang which had been cold-calling and text messaging pension holders across the UK with fraudulent offers.
Pension liberation scams have quite rightly been a target for the government for some time now, with thousands of people estimated to have released up to £400m into high risk and non-existent investment schemes in the hope of accessing their pension savings early. Some people have lost the lot to con artists, while others have been hit by significant tax and administration charges.
As City of London Police commander Steve Head says: “Pension liberation fraud is the new boiler room fraud phenomenon as fraudsters seek to exploit new opportunities thrown up by the changing economic climate. The promise of maximising returns on your pension savings may seem to make good financial sense, but the reality is you could be falling into a terrible trap which has the potential to destroy your retirement.”
The Pensions Regulator and other government bodies now appear to be delivering on their pledge to stamp out pension liberation and it is encouraging to see such a concerted response to the problem. As an industry, however, we must do our bit to help accomplish this goal.
Naturally there is a cost to schemes and administrators who carry out additional checks on transfers out, but if they lead to raids such as those carried out on Wednesday then the costs are surely worth it.
Perhaps pensions would be less of a target if we made retirement saving more flexible. Such provision already works well in countries such as New Zealand where members of the KiwiSaver pension scheme are able to withdraw some of their savings for specific events such as buying their first home. Such accessibility would leave shady investment promises far less appealing.
Desperate times call for desperate measures however, and this always creates soft targets for con artists. But by gambling the small pot they have, savers risk losing everything in a rigged game.
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