Pension transfer

Milky_Mocha

I'm surprised I don't see many threads on this topic. I do see several on cash withdrawals before age 55 which I realise is illegal and offers no gains.

A few weeks ago I was contacted by a company offering to explain what my options were with regard to my old pension pots. On meeting with the rep, he explained that rather than earn 3% growth between now and my retirement, I could transfer the pots to an alternative investment. He named two such alternatives as offering in the region of 8% growth. Is this common practice? Are there more than two out there? Is this likely to be a scam?

PensionTech

Yes, it's very likely to be a scam. 8% seems to be the go-to figure for dodgy investments and I have seen a huge number of cases where people are persuaded to transfer their pensions (even defined benefit pensions) to "alternative" investments like this. Most of the cases I have been involved in thankfully haven't proceeded, but I have personally come across some, and there are many more accounts online, where the person has transferred their pension seeking a high return only to find that their money disappears.

You can read through this thread https://forums.moneysavingexpert.com/discussion/3866319 for examples of a scam like this played through to its conclusion. (The investment in this case, StoreFirst, has also now been the subject of numerous news articles and involved in some Pensions Ombudsman cases - like this https://www.pensions-ombudsman.org.uk/wp-content/uploads/PO-3590.pdf.) There's another thread about a different scam here https://forums.moneysavingexpert.com/discussion/4935321 (also the subject of Ombudsman cases like this https://www.pensions-ombudsman.org.uk/wp-content/uploads/PO-7428.pdf).

Note that it took years for the consequences to be realised and the plans to be widely acknowledged as scams. The scammers are always, always, one step ahead, and if you're looking for conclusive proof that the people who have contacted you are definitely involved in illegal activity, I can tell you that you won't get that proof until it's too late.

These scams are often a part of organised crime and the police organisation Action Fraud has set up a reporting service so that you can give details of information like this.

http://www.actionfraud.police.uk/fraud-az-pension-liberation-scam

A lot of the information about pension scams does relate to release before 55 - you're right - but increasingly the activity is around more traditional boiler-room scams where you get a nice seemingly-plausible and not-at-all-illegal offer of high returns on alternative investments. Even better for the scammers because they don't have to give you any of your pension money to get you interested - they can just steal the whole lot.

There are also warnings from the Financial Conduct Authority and The Pensions Regulator, among others, about this type of scam.

https://www.fca.org.uk/your-fca/documents/protect-your-pension-pot

http://www.thepensionsregulator.gov.uk/individuals/dangers-of-pension-scams.aspx

Out of interest, where did this "3%" figure come from in respect of your existing pension? Did they tell you that? What type of pension do you have?

jamesd

Milky_Mocha wrote: »

A few weeks ago I was contacted by a company offering to explain what my options were with regard to my old pension pots.

That's all you need to know. Legitimate firms don't cold call.

You can expect many more investment calls in the future because you're probably now on a "sucker list" of people who are potentially open to being scammed like this.

Milky_Mocha wrote: »

On meeting with the rep, he explained that rather than earn 3% growth between now and my retirement, I could transfer the pots to an alternative investment. He named two such alternatives as offering in the region of 8% growth.

One thing scammers do sometimes is exploit the difference between the FCA regulated returns used in pension projections and their fake returns. The FCA ones aren't actual performance, just a value that has to be used for projections. A scam can invent any number it likes.

The main UK stock market long term has had investment growth of a bit over 5% plus inflation. For much of that time that means its been returning over 8%. A scammer won't tell you that because it doesn't help to sell the product to you.

Milky_Mocha wrote: »

Is this common practice? Are there more than two out there?

Yes, it's common and yes there are far more than two out there.

Milky_Mocha wrote: »

Is this likely to be a scam?

No. It's certain to be a scam.

Last time a scammer called me to pitch an 8% deal I asked them if they were interested in buying a fully regulated product that has an expected 10% tax free payout with 30% of the purchase price refunded by HMRC. Unlike the scam this is a legitimate investment, though you can't hold it in a pension on those terms because it's a Venture Capital Trust.

If you want a free review from people who can't get money out of you, just say more about your pension pots and the investments you have within them and the people here will tell you what they think of them and offer suggestions.

dunstonh

Milky_Mocha wrote: »

I'm surprised I don't see many threads on this topic. I do see several on cash withdrawals before age 55 which I realise is illegal and offers no gains.

A few weeks ago I was contacted by a company offering to explain what my options were with regard to my old pension pots. On meeting with the rep, he explained that rather than earn 3% growth between now and my retirement, I could transfer the pots to an alternative investment. He named two such alternatives as offering in the region of 8% growth. Is this common practice? Are there more than two out there? Is this likely to be a scam?

There are plenty of posts on what you describe.

1 - Cold calling on pensions is not carried out be genuine, decent regulated firms
2 - most cold calls on pension reviews are scams.
3 - the way you describe the returns shows no attempt at explaining risk and reward and indicates a possible scam (such as using unregulated investments - forestry, overseas property, biofuels etc)

Have you checked to see if the company is on the FSA register?

jamesd

While writing about this, another sure sign of a scam is if a firm says that they will send a courier to pick up documents, cards or whatever.

They do this to get things moving as fast as possible before you have a chance to realise that you've been scammed and try to cancel. And because all you have for contact details are things that will vanish later, not even a post box that you send documents to.

Landslide_Victory

Great advice from PensionTech, dunstonh and jamesd.


Everything they have said indicates a scam.

Milky_Mocha

PensionTech wrote: »

Yes, it's very likely to be a scam. 8% seems to be the go-to figure for dodgy investments and I have seen a huge number of cases where people are persuaded to transfer their pensions (even defined benefit pensions) to "alternative" investments like this. Most of the cases I have been involved in thankfully haven't proceeded, but I have personally come across some, and there are many more accounts online, where the person has transferred their pension seeking a high return only to find that their money disappears.

You can read through this thread https://forums.moneysavingexpert.com/discussion/3866319 for examples of a scam like this played through to its conclusion. (The investment in this case, StoreFirst, has also now been the subject of numerous news articles and involved in some Pensions Ombudsman cases - like this https://www.pensions-ombudsman.org.uk/wp-content/uploads/PO-3590.pdf.) There's another thread about a different scam here https://forums.moneysavingexpert.com/discussion/4935321 (also the subject of Ombudsman cases like this https://www.pensions-ombudsman.org.uk/wp-content/uploads/PO-7428.pdf).

Note that it took years for the consequences to be realised and the plans to be widely acknowledged as scams. The scammers are always, always, one step ahead, and if you're looking for conclusive proof that the people who have contacted you are definitely involved in illegal activity, I can tell you that you won't get that proof until it's too late.

These scams are often a part of organised crime and the police organisation Action Fraud has set up a reporting service so that you can give details of information like this.

http://www.actionfraud.police.uk/fraud-az-pension-liberation-scam

A lot of the information about pension scams does relate to release before 55 - you're right - but increasingly the activity is around more traditional boiler-room scams where you get a nice seemingly-plausible and not-at-all-illegal offer of high returns on alternative investments. Even better for the scammers because they don't have to give you any of your pension money to get you interested - they can just steal the whole lot.

There are also warnings from the Financial Conduct Authority and The Pensions Regulator, among others, about this type of scam.

https://www.fca.org.uk/your-fca/documents/protect-your-pension-pot

http://www.thepensionsregulator.gov.uk/individuals/dangers-of-pension-scams.aspx

Out of interest, where did this "3%" figure come from in respect of your existing pension? Did they tell you that? What type of pension do you have?

Thanks for all these replies. I'm a naturally skeptical person but at the same time I am genuinely trying to do right by my pension so I'll get all my relevant pension information and post them on here for advice.
The 3% was a statistic he said verbally, with no reference to anything as far as I could see. Market rate, according to him.

Milky_Mocha

jamesd wrote: »

While writing about this, another sure sign of a scam is if a firm says that they will send a courier to pick up documents, cards or whatever.

They do this to get things moving as fast as possible before you have a chance to realise that you've been scammed and try to cancel. And because all you have for contact details are things that will vanish later, not even a post box that you send documents to.

Interesting you say that. He didn't mention a courier but he did text me the day before "reminding" (I don't recall being told beforehand so the word remind sounded odd) me to bring along photo ID and proof of address. I responded that I'm coming along just to hear what he had to say and would be signing nothing, as I'd think it over and research it all before proceeding.

Milky_Mocha

dunstonh wrote: »

There are plenty of posts on what you describe.

1 - Cold calling on pensions is not carried out be genuine, decent regulated firms
2 - most cold calls on pension reviews are scams.
3 - the way you describe the returns shows no attempt at explaining risk and reward and indicates a possible scam (such as using unregulated investments - forestry, overseas property, biofuels etc)

Have you checked to see if the company is on the FSA register?

The two investments he mentioned indeed included property (Ramada) and something about medical research (Gilupi)
I didn't check out his company (yet) because I was only gathering information at that point and I thought anyone could say they were from anywhere and could print a business card with anything on it.

dunstonh

The two investments he mentioned indeed included property (Ramada) and something about medical research (Gilupi)

Definitely a scam then. These are unregulated areas and a week doesnt go by in the financial press for reports of consumers losing, usually all of their pension fund, in schemes like this. This is the single biggest area of fraud in investment areas at this time.

I didn't check out his company (yet) because I was only gathering information at that point and I thought anyone could say they were from anywhere and could print a business card with anything on it.

There have also been reports of firms using the names of genuine ones to scam. It is not that common but I have seen it. Most of the scams on "free pension reviews" don't bother to hide the fact they are not regulated as most consumers won't check the FSA register.

coyrls

Milky_Mocha wrote: »

I'm surprised I don't see many threads on this topic.

I'm surprised you say that, there are many threads here on the topic of scam pension transfers and the common theme is that they all sound like what you are describing.