KEEP YOUR SAVINGS SAFE FROM CROOKS
The freedom to access your pension pot at 55 comes with the hidden risk of being targeted by conmen keen to strip you of your hard-earned life savings. Here’s how you can...
Must-read advice on how to avoid fraudsters targeting your pension pot
After your mortgage, your pension savings are likely to be your biggest financial commitment. And that makes it a prime target for crooks. The pension freedoms introduced in 2015 allowing people more flexible access to their pension pot from 55 opened up the floodgates for fraudsters.
Latest figures from financial regulator, the Financial Conduct Authority, show victims are losing on average £91,000 to scammers. Sadly, many people have lost hundreds of thousands.
But this figure could be just the tip of the iceberg as huge numbers of people feel humiliated they have fallen victim to thieves and are too embarrassed to report it.
So when it comes to accessing your nest egg you must ensure you take every precaution available to keep it safe from rogues.
NUMBERS
Remember 55 is the starting age that you can first access pension savings – it is not a deadline.
The basic rule of thumb is if you don’t need the cash, then leave it invested. There are huge tax benefits in leaving your money in your pension until you really need it.
There are limited circumstances where you are legally allowed to access a pension before you reach the age of 55. For example, if you are terminally ill. So any company suggesting you can get early access to your savings will be a scam.
TIMING
The time you choose to access your pension is crucial because if you get it wrong you could end up filling the tax man’s coffers. After your tax-free 25%, the rest of your pot will be taxed at your marginal rate. This means if you are still earning any pension income - or any lump sums you take out - will be added to your earnings, which could in turn push you into a higher tax bracket. Also, dipping into your savings too soon could mean you run out of cash too early.
HELP
It’s complicated trying to work out when and how to access pension savings and that is why it’s best to get help to ensure you make the right decision for your financial needs. If you are aged 50 or over, there are free guidance sessions from the government’s Pension Wise Service (pensionwise.gov.uk or call 0800 138 3944). You can also seek help from the Pensions Advisory Service (pensionsadvisoryservice. org.uk or call 0800 011 3797).
If you don’t feel confident making decisions about your pensions and retirement plans, it’s worth seeking proper regulated financial advice. A qualified financial adviser will be able to provide bespoke advice on your cirumstances. You can find one in your local area via unbiased.co.uk.
CROOKS
Conmen and scam artists are cashing in on the pension freedoms, hoping to catch people out and persude them to move money into dodgy investments and rogue bank accounts. The best advice is to simply put the phone down or delete emails or texts if you are offered a free pensions review, a toogood-to-miss investment opportunity or an offer to access your savings before the age of 55.
Check the scam smart website at fca.org.uk/scamsmart.