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Charges
If your provider is levying excessive charges on withdrawals, then you may
be best served transferring to a provider with lower or even zero charges.
It is your right to do this. To benefit from zero charges you may well
consider transferring to a SIPP (a Self Invested Pension Plan). Hargreaves
Lansdown, as an example offer a SIPP with no withdrawal charges. A SIPP may
not be suitable for all as the investment decisions are solely yours.
Hargreaves Lansdown are also a fund supermarket and have hundreds of funds
on offer, as well as gilots, shares and bonds. Financial advice should be
sought if required to decide your investment strategy.
Scams and cons
Savers aren't the only people pleased that they now have complete control of
their pension fund. Scammers and conmen are rubbing their hands in glee at
the opportunity presented to them. Anybody with a pension fund (apart from
those in the Civil Service Pension Scheme) is a potential victim. This page
will attempt to make sure that you're not one of them. Listed below is a
small example of what to look out for when trying to identify a scammer.
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If you are cold called by someone who wishes to
discuss your pension options then hang up or shut the door. If you
receive an unsolicited email then delete it. If you are
approached whilst out shopping say no thank you and keep walking. Reputable advisors do
not cold call. If you wish to discuss your pension with an advisor then
visit the
Pension Wise website for access to
free impartial advice.
For more detailed investment advice, then contact
a Financial Conduct Authority (FCA) regulated Financial Advisor. You can check
whether a Financial Advisor is regulated at
http://www.fsa.gov.uk/register/home.do For advice on how to
find a regulated financial
advisor visit
https://www.moneyadviceservice.org.uk/en/articles/choosing-a-financial-adviser.
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Phrases such as 'legal loopholes', 'cash bonus',
'government endorsed', 'pensions liberation', 'loan' and 'one time opportunity' are all phrases
designed to give you confidence, but they are the phrases of a scammer.
The only one that is possibly going to be true is 'one time
opportunity', because the likelihood is that you won't have a pension
fund for there to be a second time!
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A Company encourages you to
withdraw your whole pension so that
they can invest it for you. Whilst a transfer to an FCA regulated Company
is perfectly reasonable and, more importantly, tax free (see charges,
above), a withdrawal for investment is
not as a withdrawal is taxable, and
you would be presented with a hefty tax bill (see
Tax considerations and calculator) that wipes
away any claimed investment returns, in the event that they do
materialise, for years to come. A reputable Company would be able
to offer you a transfer so if they
encourage you to withdraw to to invest it
is probably a scam.
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If you send the money overseas (or by Western
Union) then you more than likely won't see it again. That holiday hotel
build which will return you 50% in 6 months doesn't exist. Keep your
money in the UK with a FCA regulated Company.
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Promises of access to your pension pot before
the age of 55. No matter what you are told you can not access
your pension pot before the age of 55, unless you are retiring
early due to ill health or you are in a scheme with special provisions
(and no reputable advisor would transfer you out of a scheme like that).
If you access your pension pot before the age of 55 then this is known
as an unauthorised payment and unauthorised payments attract a tax
charge of 55%. The scammer won't normally mention the tax charge, of
course. After
tax and fees payable to the scammer, which will be hidden in the smallprint of his contract, you might see £10,000 of your £50,000
pension pot.
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Websites that are pretending to be the
governments Pension Wise website may also crop up and look to rip you
off. If the website address doesn't begin with
https://www.pensionwise.gov.uk/ the it is not the Pension Wise
website.
Thats just a handful of ways that unscrupulous conmen will try to relieve
you of your pensions savings. The Pensions Advisory Service (TPAS) have
published a more in depth guide and some real life example cases. See
http://www.pensionsadvisoryservice.org.uk/publications-files/uploads/members_detailed_booklet_7_page.pdf
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