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You may have seen in the news today that the Financial Conduct Authority (FCA) and the Pensions Regulator have started a new campaign to warn people about pension scams. This comes after numerous victims have been conned out of their life savings.
In 2015 the pension rules changed and individuals can now access their pension pots at the age of 55. Unfortunately, this has given rise to fraudsters targeting people over this age and convincing them to withdraw money from their pension to invest in high-risk schemes. They often cold call individuals and promise high returns. Last year up to 253 people reported being victims of this sort of scam.
Some individuals targeted by these fraudsters have been promised an upfront lump sum, followed by a hefty income for years to come. However, these scams can take many forms. One scheme involved investing savings into a self-storage firm. Some offer investments abroad or involve investing in property promising ludicrously high returns. Many people do not understand the risks of investing in these schemes and have lost all of their retirement funds.
It is important to remember that your pension offers financial security in retirement and it is worth taking proper advice about what you do with it. Do not trust someone who contacts you and promises that you will make lots of money if you invest with them. You should never feel pressured or rushed into a decision involving your money. If a scheme offers low risk and high returns then it is probably a scam!
When looking for an advisor you will need someone who is regulated by the FCA and is qualified to give advice on pensions. A good pension advisor will be able to explain how your pension works and the options available to you. You may still decide to withdraw money from you pension, but make sure you understand the implications before doing so. There is an element of risk involved in all investments. Your advisor will be able to explain the different levels of risk and what these actually mean in practical terms. As solicitors, we cannot give financial advice but we often recommend clients to trusted advisors. Every advisor we deal with is fully regulated and is qualified to provide the best advice possible.