Cashing in part-pension

laurel7172

Worst case scenario:

The "capital bonds" are worthless.

The rest of your husband's £140k retirement fund will mysteriously disappear.

He gets a bill for 55% (I think) of the £140,000 from HMRC. You have to sell your house to pay it.

I think you need to stop looking for false reassurance and start looking at damage limitation. Phone the local authority as well, first thing on Tuesday, to try to stop any transfer.

Can I ask those in the know, though...given that it's a final salary scheme...wouldn't any transfer out need an IFA to sign off on it?

molerat

Capital Bonds are shopping vouchers so I doubt they will be worthless.

The best suggestion I can come up with is to contact the pension providers and instruct them not to transfer out.

GhIFA

charlton6 wrote: »

Has anyone got any facts to share reguarding this process and Ai Solutions.

Yes, [text removed by MSE Forum Team] don't do it.

You will end up not seeing the guaranteed return, the money invested will disappear, you will have no income in retirement beyond the state pension, and HMRC will come after you for a 55% unauthorised payment charge on the WHOLE amount, not just the amount that finds its way into your pockets.

This is a bad bad idea - do whatever you can to get it stopped. I know its already been said in this (and countless other threads) but the fact you are still asking for information in the light of the advice already given suggests that you haven't quite grasped what a huge mistake you are on the verge of making.

[Deleted User]

charlton6 wrote: »

The circumstances are.
I have two local authority pensions that are frozen and worth jointly 140K in transfer value, AI Solutions claim that they will re invest by transfer into a new pension making 10% pa. As part of the transfer AI Solutions will pay me 11000 in capital bonds from there marketing fund. aisolutionsonline.com

Has anyone got any facts to share reguarding this process and Ai Solutions.

Thanks for the comments so far. Being new to such forums any help will be great, Thanks again

Just think about it for a second:

They're taking your £140,000, giving you over £10,000 and then guaranteeing that they will somehow make at least 10% on your money for the next however many years?

Not only are you breaking the law by withdrawing from your pension early (no matter how the money comes to you hmrc won't care, saying "but it came from their marketing fund!" won't fly) you're giving your money to a company that is clearly demonstrating they don't care for regulations (if they did care about regulations they would not be giving you any money).

For this company to break even on your pension they have to at the very least make back the £11,000 they spent on you, then on top of that they have to increase your pension value by at least 10% each year and then they have to make their money on top of that, they would be looking at needing 15 - 20% yearly returns to make this worthwhile for them, where on earth are they going to be getting 15 - 20% returns on ~£150k? Absolute fantasy.

What are you going to do if it turns out to be a scam? They'll have your money and you've broken the law. If you contact any authorities what do you think they'll say? I know what they'll say, "so you transferred your pension and took money before turning 55?" and then next thing you know hmrc are at your door with a tax bill for your entire pension that you will never be able to afford because if you could afford to pay out £50k you wouldn't have been risking your pension for £10k in the first place.

These companies know that you can't report them if they "scam" you because you will be forced to admit to breaking the law. They'll have your £140,000, you'll have your £11,000 in capital bonds and you'll have a tax bill of £50,000 if hmrc finds out...

Pull out now, whatever you need to do to end this process, do it now.

jamesd

charlton6 wrote: »

Can anyone please advise? My husband is cashing in part of his pension (about £11,000) with a Company but they insist he can only have it in Capital Bonds, not cash! Does this sound right to you? They said there had been a change in the law and this is how he had to receive his money. Any advice would be appreciated.

Your husband should immediately contact the company where his pension money is at present and tell them not to act on any transfer requests because he has provided details and signed documents to a company that is acting improperly and likely to cause him to lose all of the money.

In your own case it's a really appallingly bad situation. Your local government pensions are some of the best available in the UK. Even a transfer to a proper UK personal pension would be a bad idea. But you've been pitched a lousy investment based on claims that can't be guaranteed (but anyone can claim any level of guarantee if all they are planning to do is take and keep your money!) and are likely to lose all or most of the money involved.

Forestry is one of the leading types of investment used by pension scammers.

Your husband should report his experience to Action Fraud who may eventually be able to get the accounts of the parties involved frozen and this might lead to him getting some of his money back if any transfers have already happened.

There are so many of these schemes now that pension providers have been asked to carry out checks on destinations to try to reduce the number of people who are losing money. Not all do these checks yet and it's possible to bypass them with a sufficiently circuitous series of transfers.

There hasn't been any change in the law that requires pension payments to be in vouchers rather than cash. It's cheaper to pay in that way because the vouchers cost less than their face value and that lets those involved in the scheme make more money. No legitimate pension firm would have such a requirement or claim a change in the law that requires it. The firm you have named isn't even authorised to provide any financial advice, according to their own web site.

atush

Oh Dear it gets worse!

The pensions being scam transferred are Defined Benefit/Final salary pensions!!! The best pensions around, and your OH signed to transfer them.

As i said way back, and others have above, the best you can do now is try to stop the transfer.

But I am not sure how quickly it would go thru, as they would have to be signed off by a proper IFA. Get on the phone at the4 earliest you can (prob Tuesday at opening), and write emails for now.

You need to stop the process ASAP.

dunstonh

I have two local authority pensions that are frozen and worth jointly 140K in transfer value,

They are not frozen. They are deferred. The transfer value is irrelevent as the benefits from these are the key thing and nothing will come close to matching those benefits from that transfer value.

AI Solutions claim that they will re invest by transfer into a new pension making 10% pa. As part of the transfer AI Solutions will pay me 11000 in capital bonds from there marketing fund. aisolutionsonline.com

[text removed by MSE Forum Team] This company is not regulated in the UK to provide investment or pension advice. Any regulated company would be fined and struck off for doing such a thing. This is how bad it is.

Stop the process now. Report it to the FCA as well or any other fraud reporting services. The pensions regulator may take an interest as well.

xylophone

https://forums.moneysavingexpert.com/discussion/comment/61378995#Comment_61378995 post 9

One would hope that the Pension Trustees would refuse to allow this to go through.

hyubh

One would hope that the Pension Trustees would refuse to allow this to go through.

Its the LGPS by the sounds of it (either one or two funds), so central government guidance for transfers out from the LGPS will be the main factor.

That said, I don't really agree with the Daily Mail article pointed to by your link - the implication is that if someone consciously if foolishly signs away DB benefits, the administrator of the DB scheme should be held responsible. There's already too much of that sort of thing IMO.

atush

I would hope the trustees would stop it (as they did in another recent case reported here) as a IFA must be involved in any DB transfer nowadays.

I do get your point (that people make stupid mistakes and perhaps should be stopped and that amounts to mollycoddling.

But people are sometimes stupid, and perhaps greedy. But as far as I know, all DB pension transfers must now be signed off by a registered IFA who presumably would not do so or would be held (or their insurance would be) liable of the money was put into an unregulated environment.