Understanding pension transfers and how to avoid being scammed

Changes made to pension regulations in 2015 allowed UK pension holders aged 55+ to access up to 100% of their pension funds and take far greater control of their money, including how and when they took their pensions

For many, this increased flexibility was a great thing — either providing them with an immediate cash injection, maybe to clear unmanageable debts, or simply allowing them to take control of their pension and to ensure their loved ones would inherit their entire fund.

However, others lost benefits. They paid unnecessary and unexpected tax bills, and left nothing to provide for their retirement. Worse still, many have been the victims of scams and lost all of their life savings. Early pension release certainly isn’t advisable for most people.

Just because there are some unscrupulous people out there, don’t let that stop you taking advantage of the pension freedom rules — just make sure you take care where you get advice. A good starting point is the government advisory service Pension Wise: they can’t tell you what to do, but they can help you to understand your options. If you follow these six steps, you won’t be scammed:

  1. Check that the firm you’re taking advice from is FCA regulated by checking the FCA register
  2. The FCA register will also show you the date the company started; this is called the Status Effective Date – if this is recently you might want to explore this further
  3. If you’re being given a recommendation before your adviser has gathered detailed personal and financial information about you chances are you’re being scammed
  4. Make sure the advice you receive is provided in writing and you’re given time to digest it without being rushed
  5. Make sure you understand what you’re doing and have been told about the downsides as well as the benefits — don’t be afraid to ask questions if you don’t understand. It’s a good idea to get a trusted friend or family member to look at the advice as well
  6. If the investment advice sounds too good to be true, it probably isn’t true

How do I find out more?
Grove Pension Solutions Ltd was established in 2007 and is an FCA regulated firm, reference number 465051. Any onward investments it recommends are also FCA regulated.

To request a free information pack, complete our Get Started Form or contact us by telephone (01959 534082) or email (info@groveps.co.uk).

This article was first published in the printed version of the Evening Standard. For a more in-depth analysis, please read our article about the winners and losers of the 2015 pension rule changes.