Pension saving will be undertaken by many people planning for retirement, but there could be risks involved. One of these is protecting hard-earned cash from the clutches of scammers, and it is hoped new legislation will help with this. Measures designed to protect pension savers and help stop scam transfers will come into force from tomorrow.
“It is important to know and understand the risks, such as, if someone is giving up a guaranteed income, losing a protected retirement age or incurring penalties on certain investment types.”
Mr Watts-Lay highlighted many employers are now offering financial guidance and education to their workers.
This endeavour could help people in spotting the warning signs of scams and protect themselves.
However, it could also assist in helping people make an informed decision before starting a pension transfer.
It is estimated, according to Pension Justice, that more than 1.3 million people have been targeted by unscrupulous regulated and unregulated advisors.
Many have been convinced into transferring their existing pensions to invest in unregulated, high risk and illiquid “investments”.
In some cases, people have transferred pension pots of £500,000 or more into worthless “investments” sold to them by dodgy or incompetent financial advisors who were not authorised or regulated by the Financial Conduct Authority (FCA).
Paul Higgs, solicitor at Pension Justice said: “That old adage of ‘if it sounds too good to be true, it probably is too good to be true’ couldn’t apply more than in the case of pension mis-selling.
“We’ve had clients that have been promised huge returns on unregulated investments into things such as storage pods, airport car parking spaces, fractional ownership of property in Cape Verde, carbon credits and more, which sadly have all turned out to be worthless”.
Pension Justice warns people should always be suspicious of cold calls, and check with the Financial Conduct Authority about whether a firm is regulated to provide financial advice.
Similarly, savers should always do their homework on the investments offered, and even discuss the matter with friends or family if they are unsure.
Understanding terms and conditions will be key, as will having a grasp of the full fees and charges applicable to the transfer.
Finally, if a person is advised to transfer their pension from a workplace arrangement, they should be wary, as it is unlikely this will be more beneficial elsewhere.