Conmen targeting savers desperate to unlock cash from their pension pots

SAVERS have been forced to turn to conmen as pension firms reject legitimate requests to cash in nest eggs, experts warn.

A Money Mail investigation last week uncovered how savers have been denied access to their pensions with long delays or firms insisting on giving unnecessary advice.

Now they appear to be inadvertently putting their life savings at risk, turning in desperation to the unscrupulous companies that have sprung up to exploit pension freedoms.

Companies promise to unlock cash from pensions but often charge huge fees – as much as 20 per cent of the fund – and can bet the money in high-risk investments.

There will be more than £1billion lost to pension scams by the end of this year, reaching £3billion by 2018, pensions firm JLT Employee Benefits found.

Tom McPhail, head of pensions research at investment company Hargreaves Lansdown, said: ‘It’s important pension companies sort out giving customers access to their money.

‘People could end up turning towards unscrupulous firms that will try to take advantage of the situation and rip them off.’

Justin Modray, founder of website Candid Financial Advice, said: ‘If insurers don’t get their act together customers could turn to companies which promise to take care of cashing in their pensions but which charge exorbitant fees or put their nest eggs into risky deals.’

Since the launch of the freedoms, scores of firms have sprung up online claiming to offer pension advice.

They operate from websites that can be set up within hours for less than £20, while others cold-call customers promising free pension reviews. Many of these companies give the impression they are qualified f i nancial advisers or are legitimate firms.

But in fact they are not regulated by the City watchdog Financial Conduct Authority, meaning consumers have no protection if the investments fails or the firm disappears with their life savings.

Last month figures from consumer group Which? found a third of over-55s had been contacted by firms trying to sell them high-risk investments.

Lesley Titcomb, of The Pensions Regulator, said: ‘The people behind pension scams are often agile, sophisticated and organised.

‘Whatever the law is, they will seek to exploit it – so we expect the scams we see to continue to evolve in light of the new flexibilities available.

‘Arm yourself with the right information and never make a hasty decision. Once the transfer has gone through, it’s too late.’

The Treasury said it has been ‘ working tirelessly’ to shut down illegal schemes.

The Pensions Advisory Service, which gives free help over the phone, has had a surge in the number of callers who have been approached by the firms, with some asked to pile money into property in exotic locations such as Cape Verde.

Savers searching for help with the pension freedoms on the internet are bombarded with information from dozens of fi r ms promising to help customers unlock cash from their pensions.

Many lure in savers by boasting that their service is simple and convenient. All someone has to do is fill in a few forms to move over their cash.

It is feared that customers left frustrated and confused by t heir pension company’s response will risk turning to these firms.

The Mail has been inundated with letters and emails from savers struggling to get hold of their money.

Some have faced lengthy delays and been forced to take advice they did not need, while others were baffled by the process.

A reader f rom Northern Ireland turned to an online firm after struggling to get a pension valuation from her insurer but was hounded with calls after rejecting the risky investments.

A Financial Conduct Authority spokesman said: ‘People need to be alert to scammers offering opportunities that are too good to be true.

‘If you get cold-called about an investment opportunity, hang up.’

Dr Yvonne Braun, of the Association of British Insurers, said: ‘No provider wants to put unnecessary obstacles in the way of customers exercising their pension freedoms, but all want to ensure that customers do not make hasty or illinformed decisions to give up valuable benefits that are typically worth many thousands of pounds.’

A Treasury spokesman said: ‘We believe people should have the freedom to decide how to spend their money in retirement, no matter who they’ve saved with, and there’s no excuse for firms to claim you can’t access your money.

‘People should take their time to decide what to do and Pension Wise, the Government’s f ree and i mpartial guidance service, is essential in helping you understand your options and how to spot a potential scam.’

‘Hang up if you get cold-called’