Pension access is an important consideration as many will have significant funds put away for their retirement in their pot. With the financial impacts of COVID-19 felt, some may feel the urge to dip into their pension savings to provide them with extra support in the here and now. However, current rules state pension “freedom”, that is to say access to cash without penalties, is only available once a person reaches 55.
Nonetheless, in recent years, some schemes have emerged which promise Britons early access to their cash.
These pension liberation schemes involve individuals being told they can access pensions before 55 without early access penalties.
HMRC could view an early pension withdrawal as unauthorised, and Britons could have to deal with a charge of up to 55 percent.
In a move to crack down on pension liberation scams, tax authorities have now deregistered 770 pension schemes.
HMRC, though, has come under some scrutiny for its approach to pension liberation victims in the past.
It has been argued the Revenue has relentlessly pursued tax charges, despite Britons being victims of pension liberation scams.
However, John Glen, the Economic Secretary to the Treasury, recently responded to concerns after they were raised by MP Stephen Timms.
He said: “HMRC’s role is to apply the laws laid down by Parliament. However, in doing so, it does all it can to help anyone who believes they may have been misled about their pension investments.
“HMRC recognises that facing a large tax bill can be very stressful and is committed to making affordable payment arrangements and giving enhanced support to customers who need extra help.”
People will want to keep an eye out for pension liberation scams, and there are certain warning signs to bear in mind.
Companies promising to jump through “legal loopholes” or who offer Britons “cash back” from their pension are a sure sign a scam is taking place.
In addition, if a person receives a message out of the blue, or is asked to act urgently on their pension, they should be hesitant.
The Pension Regulator has also provided guidance to help Britons who may come into contact with pension liberation.
Cold callers should always be avoided, and people should not part with any financial information.
The name and credentials of the organisation should also be cross-referenced by a person to see whether they are legitimate.
If in doubt, individuals are always encouraged to speak to an independent adviser who will have the knowledge and expertise to deal with the situation in the best way.
Finally, if a person feels they are being targeted by pension liberation, they can always report the company.
Britons should reach out to Action Fraud, an official organisation which should be able to progress the matter forward if there are concerns.
Express.co.uk has reached out to HMRC for further comment on the matter.