Pensions freedom rules offer an opportunity to scammers.
One tactic often employed by scammers is to grab hold of whatever is topical and bend it to fit the scam. For 2015, I'm sure that the scam of choice will be pensions liberation.
From 6th April this year, you will be free to do as you like with your personal pension pot once you reach 55. You can spend it all on a luxury cruise. You can leave it in the fund to (hopefully) grow. Or you can switch funds and fund managers in the expectation of either a safer or a more aggressive investment stance.
You can even opt for the traditional annuity, accepting a poor return as a swap for the total security it gives for the rest of your life, and perhaps for the remainder of your partner's life as well.
[SPOTLIGHT]For many of the 350,000-400,000 who come up to retirement age each year with a personal pot, it will be the first time they have ever had to make such a serious financial decision. The Government has promised to offer free guidance, though it's still unclear what this will consist of, what advisers will be able to charge the state for their services, and whether it will really help.
Ripe for a scam
This uncertainty presents a golden opportunity for scammers. Already they will be tracking down the contact details of those in the retirement age bracket.
Here's what to expect if you're one of the 'lucky' ones to receive a call from them.
It's in your hands!
Expect the fraudsters to emphasise that a great retirement is in your hands. The traditional annuity purchase route offered poor value, so the Government ended it. Now a financially savvy person like you can make a much smarter decision about what to do with your pension pot, and end up far richer. And you certainly don't need to make use of the Government's advice service. They won't struggle to conjure up a couple of quotes from the financial press about how unfit for purpose it is.
A great "guaranteed" return
Now here comes the scam patter. There will be talk of wonderful investments which offer a "guaranteed" return of 15-20% a year, far better than anything else you'll be offered through traditional investment routes. Chances are there will be something 'exotic' about these investments, whether its buying up land in Brazil or a stake in gold mine. But no matter how risky they may sound, they will all be absolutely certain winners.
And the scammers will emphasise that they must be legit as HM Revenue & Customs has no problem with you placing these investments in your pension. Of course, outside of residential property there is very little that is not approved for a personal pension.
Time for the transfer
The next stage will be convincing you to transfer your pension pot into a self-invested personal pension (SIPP) that accepts the sham 'investment'. You'll hear plenty of talk about how this will avoid the tax which would otherwise be levied were the fund proceeds to be withdrawn rather than transferred.
This is where you'll be sent the paperwork, which will either be totally fraudulent or will reveal in the small print that you are being charged hundreds of times the real value of whatever 'asset' it is that you are investing in.
Rinse and repeat
By the time you realise you've been had, the scammer and his firm will be long gone. But there will be other firms with similar names, offering similar deals, targeting those nearing retirement.
Don't let 2015 be a happy year for the pension liberation scammers.
More on scams:
Scam that promises to turn £50 into £2,000