.png)
.png)
Companies that promise to help pension scheme members take out their cash early are keeping quiet about the serious financial consequences, experts have warned.
The process known as pension liberation – and sometimes as pension loans or early release pension offers – involves the transfer of savings to an arrangement that will allow a person to use his or her funds before the normal minimum pension age of 55.
The Pensions Regulator (TPR) has expressed concern that those being targeted by offers of liberation are not being told about the potential implications. Tax and penalties of more than half the value of the savings can arise, in addition to the high costs, typically 20% to 30%, charged for entering into such an arrangement.
Failure by the companies to provide misleading information or none at all is likely to be fraudulent behaviour, said TPR.
The organisation joined forces with HMRC and the crime-reporting centre Action Fraud in 2012 to urge caution towards liberation schemes. The three bodies have now co-published a set of leaflets about the pension loans currently on the market.
The literature is aimed at members and trustees of registered pension schemes to provide information about the serious downsides of liberation, and to explain about what can be done to reduce risk and the tax impact of releasing funds early.
