Pensions are not the raciest of things, even for personal finance journalists, but when the City of London police swooped on an address in the capital in early-May 2013 it certainly dragged pensions into the spotlight.
Sadly, for all the wrong reasons.
The raid was part of a clampdown by the government on criminals offering so-called “pension liberation” services. As very few people can “liberate” their pension before the age of 55, anyone offering to do this for you should be avoided.
I'm going to tell you exactly what to look out for and why you should always report offers of this type to the authorities.
People who save into a workplace or private pension are only able to access their pension pot after the age of 55, although in rare cases – such as if someone has a terminal illness – they CAN access that pension pot early.
But fraudsters promise to transfer victim's pension savings before that age. Unfortunately, in almost all cases it's illegal. What happens is that the victim's pension pot is switched into a high risk or even a non-existent investment scheme, often based overseas.
It gets worse.
The criminals also routinely take up to half people's pension pots in so-called fees, while HM Revenue & Customs nab another chunk in tax charges. It can decimate people's future retirement income and force many to work into old age.
Pension liberation is, simply put, ruining people's lives. Some individuals have lost up to a million pounds as a result.
Why is it happening? Because many people are struggling to make ends meet in the wake of the recession, with inflation far outstripping wage growth. Simply put, a lot of people simply need the cash to make ends meet.
At the same time, pension scheme trustees – they're the people who look after your best interests as a pension scheme member –are legally unable to refuse every request for a pension transfer, regardless of the age of the person requesting it. Until that rule changes, people remain vulnerable.
So how can you protect yourself? It's quite simple. Just. Say. No. The Pensions Regulator says most people are being targeted by spam phone calls and texts – with a huge surge in the last year. If you receive a spam call or text, don't act on it. I can't stress that enough. Instead, report the number to the authorities, most notably Action Fraud at www.actionfraud.police.uk or 0300 123 2040.
Remember: you've only got one pension pot – so when it's gone, it's gone. Don't be a victim.