Following the Pension Reform
In the first two months following the pension reform, the Association of British Insurers reports £1.8 billion was taken out of pension funds. Pension holders are using their savings for reinvestment, payment of debt, purchase of buy-to-let property as well as just indulgence! However, it’s been reported that since the reform, a rise in fraudulent schemes.
Warning from regulators
Regulators warned that changes to pension legislation could lead to an increase in scam pension products looking to catch those eager but inexperienced investors who don’t have access to professional financial advice.
Action Fraud, a fraud reporting centre, reported a significant rise in scams in the leading months following the pension reform in April 2015. In May 2015 alone, £4.7 million losses were reported. The total reported was £1.5 million in April 2015, which was the highest month since 2013.
Difficult to know who to trust
In these situations retirees are convinced to withdraw from their pension to invest in another product, with promises of a better return and on occasions it can be months, or even years, before an investor may know the depth of the fraudulent product.
It is a dangerous prospect for those pension holders getting over excited about the ability to withdraw their pension savings from age 55, without taking the necessary advice.