Beware pensions scams

Pension scams cost Brits £4 billion a year and are anticipated to be the next big financial scandal, it was reported this month. 

A TV celebrity is among thousands of Brits who transferred cash out of defined-benefit pension schemes into inappropriate or high-risk ventures. The well-known broadcaster, who cannot be named for legal reasons, invested more than £1million into an offshore pension scheme which is now feared to have collapsed. It comes after reforms by George Osborne allowed savers access to a quarter of their pots tax-free from the age of 55. In one case a former army veteran handed over £34,000 to invest in truffle-free farms that were never cultivated. Another saw an airline pilot lose £380,000 in a scam now pursued by HMRC.

Baroness Altmann, a former pensions minister, told The Times: “Pension scams have the potential to be the next big financial scandal. Commentators believe that regulators have failed to respond with adequate urgency and are leaving consumers at the mercy of fraudsters. It is thought a third of all pension transfers exhibit “red flags”, up from one in 19 three years ago.