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Pensions 'liberation' scam tops £400m Pensions 'liberation' scam tops £400m
(35 minutes later)
By Bob Howard Reporter, Money BoxBy Bob Howard Reporter, Money Box
The UK's Pensions Regulator says individuals have given illegal "pension liberation" schemes an estimated £400m since 2008. The pensions regulator says individuals have given illegal "pension liberation" schemes an estimated £400m since 2008.
The schemes offer to give people early access to their pension funds.The schemes offer to give people early access to their pension funds.
They involve transferring the pension pot from a legitimate scheme to one set up by the "pension liberation" company.They involve transferring the pension pot from a legitimate scheme to one set up by the "pension liberation" company.
But the regulator has warned that tax charges and unregulated investments abroad could leave little pension behind. But Bill Galvin, chief executive of the Pensions Regulator, has told BBC Radio 4's Money Box programme tax charges and unregulated investments abroad could leave little pension behind.
Costly transfersCostly transfers
Legitimate pension schemes are normally under a legal duty to transfer a pension to any scheme which is registered with HM Revenue and Customs and the Pensions Regulator.Legitimate pension schemes are normally under a legal duty to transfer a pension to any scheme which is registered with HM Revenue and Customs and the Pensions Regulator.
But speaking on BBC Radio 4's Money Box programme, Bill Galvin, chief executive of The Pensions Regulator, said if a legitimate scheme was worried about where the money was being transferred to, there were different options available. But Mr Galvin said if a legitimate scheme was worried about where the money was being transferred to, there were different options available.
"There are circumstances in which we will support them in a decision to delay or not to transfer monies where they have certain suspicions," he said."There are circumstances in which we will support them in a decision to delay or not to transfer monies where they have certain suspicions," he said.
The regulator said challenging economic circumstances were tempting more people under 55 to attempt pension liberation.The regulator said challenging economic circumstances were tempting more people under 55 to attempt pension liberation.
It warned people to beware of unsolicited phone calls or emails offering the service, especially if they were being pressurised to act quickly.It warned people to beware of unsolicited phone calls or emails offering the service, especially if they were being pressurised to act quickly.
It said sometimes bankruptcy lists were being scanned to find suitable victims as well as those of people in occupational pension schemes.It said sometimes bankruptcy lists were being scanned to find suitable victims as well as those of people in occupational pension schemes.
Tax implicationsTax implications
Signing up can often be disastrous. If someone has a pension pot of £20,000, schemes may offer them access to half of that.Signing up can often be disastrous. If someone has a pension pot of £20,000, schemes may offer them access to half of that.
The scheme will take a commission of around £4,000 - 20% - leaving the victim £6,000 in their pension fund.The scheme will take a commission of around £4,000 - 20% - leaving the victim £6,000 in their pension fund.
That is often invested in offshore vehicles and might never be seen again. The individual will also be obliged to pay tax of between 55% and 70% on the money released.That is often invested in offshore vehicles and might never be seen again. The individual will also be obliged to pay tax of between 55% and 70% on the money released.
The Pensions Regulator is about to launch a publicity drive to warn people of the dangers.The Pensions Regulator is about to launch a publicity drive to warn people of the dangers.
Bill Galvin said it is taking strong action against rogue firms.Bill Galvin said it is taking strong action against rogue firms.
"We have shut down over the last 18 months a number of vehicles which have been used for 'pension liberation' schemes, we have installed independent trustees," he said."We have shut down over the last 18 months a number of vehicles which have been used for 'pension liberation' schemes, we have installed independent trustees," he said.
Money Box is broadcast on Saturdays at 12:00 GMT on BBC Radio 4 and repeated on Sundays at 21:00 GMT. Money Box is broadcast on Saturdays at 12:00 GMT on BBC Radio 4 and repeated on Sundays at 21:00 GMT.
You can listen again via the BBC iPlayer or by downloading Money Box podcast. You can listen again via the BBC iPlayer or by downloading Money Box podcast.
Have you been tempted by pension liberation? Let us know your viewsHave you been tempted by pension liberation? Let us know your views