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Pension Liberation Fraud

What is Pension Liberation Fraud?

Pension liberation is a transfer of a scheme member's pension savings to an arrangement that will allow them to access their funds before age 55. Some pension transfer schemes that offer to release your pension before age 55 can be illegal if you are misled or not informed about the consequences of entering into one of these arrangements. This could be because you’re not informed of the tax consequences, fees involved or how the remainder of your pension savings are invested.

In rare cases – such as terminal illness – it’s possible to access pension funds before the age of 55. However, for most people, promises of early cash are false and are likely to result in serious tax consequences.

What are the risks of releasing my pension early?

You may be:

  • Poorer in retirement
  • Hit by unexpectedly high fees
  • Misled as to the consequences of the transfer.
  • Hit with significant charges by HM Revenue and Customs (HMRC).

Converting your pension into cash before age 55 might sound very attractive if you urgently need money. However, if something sounds too good to be true, it often is.

How might fraudsters target me with pension loans or pension transfer offers?

An increasing number of companies are targeting individuals claiming that they can help them release their pension cash early. You may be targeted through websites, mass texting or through cold calls offering pension loans or opportunities to cash in your pension.

You should be very wary about giving out information in response to a text or cold call. You should always make sure that you know who you're dealing with.

If you are concerned or are approached and offered the services we have described above, you should contact Action Fraud on 0300 123 2040.

Is pension release the same as 'pension unlocking'?

No. Pension release should not be confused with 'pension unlocking'. With pension unlocking, a person aged 55 or over can release up to 25% of their total pension as a tax free lump sum.

Unlocking your pension will almost certainly mean you will have less income in retirement and, as a result, unlocking is only suitable for a very limited number of people and circumstances.

Further advice/Information

If you are considering transferring your pension, you should consider taking advice from an independent financial adviser (IFA) and make sure that you take unbiased advice from someone who isn’t associated with the offer you’ve received. You can check if an IFA is registered with the Financial Conduct Authority.

A pension liberation leaflet is available from The Pensions Advisory Service, this leaflet includes five steps to avoid becoming a victim. Home - The Pensions Advisory Service (TPAS)

You can also watch the following video on YouTube: Thinking of taking your pension early - watch out for pension fraud.