The new pension freedoms allow anyone over the age of 55 to release the money in their pension funds.
While this has been heralded as a positive move to give the consumer more choice, the sharks are circling silently.
Crooks see this as a unique opportunity to strip the lifetime savings from anyone who is slightly too naïve or hopeful.
Here’s how to spot them...
Ignore anyone who tells you that people under 55 can take out their pension.
If you fall for their blandishments, the best you can hope for is a bill from HMRC for 55% of the amount ‘liberated’.
The worst is you will get the bill but the money itself will have disappeared.
Guide to reviewing your pensions
Only ever invest in something you understand. For most people that rules out any investment in another country.
So holiday homes in Costa Rica, Nigerian cement factories, or parking bays in the Middle East are not for you.
Beware of anything with the word ‘green’ or sustainable’ in it. Bio-fuel waste management in South America, sustainable rainforest harvests in Congo, or carbon credit trading anywhere should all be avoided.
Read our guide to pension jargon
Never invest in anything if you were cold-called. Share scams from so-called ‘boiler rooms’ con around 5000 people a year.
Landbanking – selling small plots of muddy fields on the promise of future planning permission to develop – is still going on.
And wine investment firms will cold-call with ‘facts’ about how fine wine has grown in value.
Find out how you can save more than £50 on a case of Laithwaite's Wine...
If anyone offers you a return of more than 6% a year, treat it with great caution. And if a return is guaranteed, you can be sure it won’t be.
Find out more about the pension freedoms.
If in doubt, seek professional advice
If you want to invest your money – and remember it is already invested and growing tax free in your pension fund – then only ever consider regulated investments which are part of the Financial Services Compensation Scheme.
Even with the FSCS, only the first £50,000 of your invested money is protected. And then only from scams, fraud or bankruptcy, not from poor investment choices.
Only ever take advice on an investment from a qualified, authorised, regulated, financial adviser. Preferably one who has pension qualifications and, better still, someone who is a chartered or certified financial planner.
And finally, remember if you take your money out from a pension fund, it is added to your income that year and taxed. So you will almost certainly lose 20% of it and probably lose 40% of some of it. You will have to recover from that one-off hit before you begin to show a profit.
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