Pension backed loans

Ritchie83

I am looking for some advice regarding this company Pension Backed Loans (PBL) I had heard that you could unlock some of the value of your pension early if you were under the age of 55. I am 29 and currently have a pension of around £21000 and was looking to get some money by using it as security. I have really bad credit due to the recession and loosing my job so thought this may be a way of getting some money to get me back on my feet. I have had some contact with PBL and they have offered me the chance to transfer my pension into a SIPP which they would invest into carbon credits for me and for me doing this they would give me approx £3750 as commision for moving my pension. I know it does sound good to be true but they also said that if i didnt like how things were going after 2 years i would be free to transfer the pension back out of the scheme and into another pension. Now the £3750 is not gonna come outta my pension pot so i should still have a decent pension after 2 years to transfer if i didnt like how things were going. I have asked for advice because im not sure if this is legal. The did say they would be moving it into an FSA regulated company. Any advice would be much appreciated.

jem16

Steer well clear.

The High Court has ruled that it is illegal.

http://www.moneymarketing.co.uk/pensions/high-court-rules-unlocking-schemes-contravene-pensions-law/1043412.article

McKneff

Don't fall for it, please.

dunstonh

Now the £3750 is not gonna come outta my pension pot so i should still have a decent pension after 2 years to transfer if i didnt like how things were going.

It does come out of your pension. Do not kid yourself.

know it does sound good to be true

It is because it is unlawful.

The did say they would be moving it into an FSA regulated company.

Can you imagine any FSA regulated company doing something that they High Court was ruled unlawful?

Linton

Not only are pension backed loans illegal, the FSA has issued warnings about investment schemes involving carbon credits.

WhiteHorse

Ritchie83 wrote: »

I am 29 and currently have a pension of around £21000 and was looking to get some money by using it as security.

Madness, utter madness.

CannySaver_2

Hi

To summarise the other's points of view and add a few of my own:

1. Pension loans have been found to be illegal by the high court
2. An alternative to this scam is to share commission with you, HMRC deem this as an unauthorised payment and will tax it to high heaven
3. Why on earth do you want to invest in carbon credits? What do you know about carbpn credits? Why are they a good investment? The answer is you probably don't know much and that they are simply being used as a means to generate high commissions / loans
4. You are unlikely to be able to get out after two years, this type of investment is likely to be highliy illiquid and therefore tough to sell
5. The £3,750 is likely to come from the carbon credits product, which will reduce any returns you get, charges, irrespective of the type of investment, come from one place, the investors pot
6. Why do you need the money? This pot is here for your retirement, it needs to be added to over the years and invested wisely, not given to some crack pot scheme which will lose you money (sorry for sounding harsh)
7. The SIPP may be run by an FSA regulated firm, however I can almost guarantee that the carbon credits scheme is not regulated and is probably a UCIS (Unregulated Collective Investment Scheme) which marketing to you is frankly illegal as you have to be a sophisticated investor. There are a number of tests to see if you are classed as a sophisticated investor which to be honest you don't sound as though you would pass
8. The SIPP provider who is taking this sort of business should hang their head in shame, they are allowing something which is illgeal (commission sharing) to continue and in my opinion should be !!!! down with the directors barred from taking regulated positions. Do you know which SIPP provider is being used in this case?

I really hope my post and others put you off going down this route.

The Canny Saver

kgk_2

just to be clear then am I right to think there is NO WAY of accessing your pension before the age of 55? I have £16,500 in my pension which will be practically worthless by the time I reach retirement age and I could really do with it now to put towards a deposit on a house. Seems crazy not to be able to access it to put towards what is a long term investment.........

RichandJ

Unless you have an illness which means you're going to die within a year the answer is no.

The real craziness would be allowing people to access money that is there for their retirement. That is why the law does not allow it.

molerat

kgk wrote: »

just to be clear then am I right to think there is NO WAY of accessing your pension before the age of 55? I have £16,500 in my pension which will be practically worthless by the time I reach retirement age and I could really do with it now to put towards a deposit on a house. Seems crazy not to be able to access it to put towards what is a long term investment.........

and a pension is ............ ?

hugheskevi

The real craziness would be allowing people to access money that is there for their retirement. That is why the law does not allow it.

I have sympathy for kgk here.

Pension saving is useless in the short term, useless in the medium term, and great for the long-term. So if strict restrictions about how you can use the money leads to the money not being there in the first place, the restrictions are rather counter-productive.

Therefore, it isn't surprising that folk balancing decisions about saving for a house deposit, paying student loans, etc, don't find pensions attractive. Those people are going to be young, and know that they are waving goodbye to any pension saving for at least 30 years. Whereas a 45 year old knows that within 10 years they can access the money - for that 45 year old the pension has no short term value, but starts to have medium term value. And the 45 year old is likely to be more financially secure (lower mortgage, other savings) so is likely to be better placed to accept the illiquid nature of a pension.

Given we don't have a system of compulsory pension saving, and that our DB system which did everything for you has all but ended, I think a lot more innovation could be shown to make pensions have some use in the medium term for younger people.

There are things short of early access which could be done, such as allowing pensions to be used as collateral for mortgages to give banks security, only accessible following court order, would give pensions some medium term uses.

Still, none of that affects kgk's question - no, not getting your hands on the pension. But it won't be worthless in the future, it should increase in real terms quite a bit by the time you are 55.