Get rich quick pension ‘deals’ really are too good to be true
THE new pension rules have only been in force for a month or so.
But already we are being warned of scams by companies looking to get hold of pension money from those approaching retirement.
A recent report from Which? suggested that a third of over-55s have been contacted by companies that could be frauds.
More worryingly, many of those questioned reckoned that they wouldn’t be able to spot a genuine investment opportunity.
And about 40 per cent reckoned that they could quite easily fall victim to a scam.
The new pension freedoms do offer great flexibility for some people approaching retirement.
But they could also leave others with a big tax burden and no money to live on if they spend it all too soon.
So be on your guard if you are called out of the blue by a company offering something that seems too good to be true – especially if they talk about “great investment opportunities” or “one-off tax breaks” or “free reviews of your pension funds”.
What they are offering you is unlikely to be free and even less likely to be a great investment opportunity, unless they are referring to the opportunity to line their own pockets – with your money.
Taking money out of your pension fund should be done in a measured way and only when you have looked carefully at the tax implications.
And it should only be considered if you have something else to do with the money.
In other words, don’t just take it out of your pension because you can then leave it lying in a bank account earning no interest.
The Government talked a lot about the freedoms and flexibilities that they were introducing with the new pension rules.
However, they didn’t talk very much about the tax implications of the changes. I’ve already spoken to several people who only realised the tax implications of withdrawing money from their fund when it was too late.
Don’t waste money that you’ve spent years building up on a false promise of a quick buck that, in many cases, you don’t even really need right now. I HAVE had a problem with payments to my Marks & Spencer credit card. In March, I used it for the first time in two years or so.
Previously, I had a direct debit set up to pay off the balance in full on the 21st of each month but I wasn’t sure whether this was still active.
So on April 16, 2015, I paid off £3380.80 of a £3619.20 balance.
I meant to pay off the balance in full but paid off the available to spend balance instead.
A few days later – on April 21 – M&S took £3619.20 out of my Nationwide account via direct debit.
It was returned the same day due to lack of funds. At this point, my M&S balance was £238.40.
At the same time, I realised my mistake in not paying off the full balance and paid £250 to M&S to cover any interest I may have incurred,