
Pension liberation
Beware pension liberation scams
Changes to pension rules introduced in 2015 mean you've greater access to your pension. But you still need to be wary of pension liberation scams, which claim you can get access to your pension early. Pension liberation scammers claim they can get your money from pensions before you're 55, but the huge fees and taxes you'll pay can leave you with nowt for retirement and now scammers are targetting the over 55s as well.
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Can I withdraw money out of my pension early?
Changes to pensions that came into effect in April 2015 mean that from age 55 onwards you can get access to as much of your pension money as you like, when you want it - though this is rising to age 57 from 2028).
Despite these changes, the cruical fact still remains that you can only get access to your pension pot when you turn 55 (57 from 2028). This means that 'pension liberators', who claim you can gain access to your pension money sooner, are trying to get you to break the law.
Pension liberation
Pension liberation's a scam that claims to release cash from people’s pension pots before they reach age 55. Promises of early cash are false and are likely to result in you paying big bills, in some cases leaving people with no savings for retirement.
Victims are usually contacted by email, phone or text by fraudsters trying to trick them into transferring their pension funds to bogus arrangements for a commission fee.
- Scams for over 55s
It's not just the under 55s that are being targeted in the pension freedom world. Over 55s are being contacted by fraudsters looking to take advantage of people's interest in the change in the law. If you are cold called by someone offering to give you a free pension review, it's almost definitely a scam, so put the phone down.
Just like with pension liberation, the fraudsters will transfer your pension fund into an investment with attractive BUT often unrealistic returns, meaning you will lose your hard-earned cash.If this happens you won't be charged the whopping 55% tax that you would for accessing your pension money early, but the scams can be just as detrimental to your money. If you're unsure whether something is legit, you could check the Government's ScamSmart website. It quite simply tells you to follow three simple steps to stay safe with your pension money:
1. Reject cold calls – investment scammers will often cold call.
2. Check the FCA Warning List for a list of firms to avoid.
3. Get impartial advice.
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Pension liberation need-to-knows
Scams claim you can take money from your pension before you reach 55. But you can't, and you'll get penalised for it.

Pension liberation - Beware!
Don't get duped by the language. These scams are targeting people up and down the country, but they could leave you with nowt for retirement.
If you get approached by a company that says it can help you get at your pension, immediately ask yourself:
Is it allowing me to get at my pension before age 55?
If you answer 'yes', it is pension liberation, and it is most definitely not legit. So JUST SAY NO!
What do pension liberation schemes actually do? Liberation schemes often work by transferring some of the pension fund into highly risky or opaque investment structures, frequently based overseas - with no guarantee that you'll get your money back if something goes wrong.
The Pensions Regulator says that it has been made aware of options to purchase property, property abroad, timeshares, oil, trees, crops and carbon credits and that countries have included Belize, Cambodia, Cyprus, the British Virgin Islands and Germany.
Investing money abroad can make your money harder to trace and retrieve if/when the scam is closed down and allows those running the scheme to spend your money in jurisdictions which normally have less strict regulation than the UK.
The Pensions Regulator is trying to crack down on these scams and the Government wants new laws to ban them, but until then, you'll need your wits about you.
How to spot pension liberation scams
There are certain things you can look out for when you're made an offer such as:
- Advertising aimed at people under 55
- The phrase "legal loopholes" - THESE DO NOT EXIST
- Pushy advisers or 'introducers', who offer upfront cash incentives
- Companies promoting a "loan", "saving advance" or "cash back" from your pension
- No mention of the lump sum being tax-free, or if the provider is evasive about tax in general
The Pension Regulator has five tips to avoid falling victim to the scam:
- NEVER give out financial information to a cold caller - even if they know specific details about your pension
- Check the credentials of the company and any advisers, who should be registered with the Financial Conduct Authority
- Ask for a statement showing how your pension will be paid at retirement and ask who will look after your money until then
- Speak to an adviser who isn't associated with the deal you've been offered for unbiased advice
- If you think a company is trying to get you to liberate your pension, report the company to Action Fraud or call it on 0300 123 2040. It can prosecute companies found breaking the law
How much could I lose?
Be warned, the answer to this is scary! Many people will lose 50% or more of their pension, and potentially the whole thing. For some, this could be £100,000s.
Let's suppose that you start out with a fund of £100,000. You're 51, you want to get your hands on £25,000 and you've gone with a pension liberation firm...
- You take £25,000, so you've £75,000 left.
- Your pension liberation firm has fees of 20%, so takes £20,000 from your pension fund - you've now got £55,000 left.
- The taxman pops up, and charges 55% of the whole pension pot - so you're left with... NOTHING in your pension.
You've got your £25,000, but you're left with absolutely nothing for retirement. If you'd waited four years, until you were 55, you could have legally got the £25,000 and not lost £10,000s in taxes and fees.
Quick question
Alternatives to taking money from your pension

You may have dug yourself into a debt-ridden hole there seems no escape from. But before you take the decision to take money from your pension earlier than you need to or want to, it's crucial to consider all other options.
Other avenues you could explore:

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