Should my daughter think about accessing her pension benefits before she reaches age 55?

My daughter was recently approached by a company claiming it could transfer her pension benefits before she reaches age 55. Is this a good idea?

Question asked by Irene Flannigan
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Answered by Stephen Moore

Don’t get sucked into a pension scam

Unless your daughter is in very poor health, it’s illegal for her to access her pension savings before the age of 55.

Unfortunately, the recent changes to the pension regime that have increased the ways in which pension benefits can now be accessed have also created numerous opportunities for unscrupulous operators to deceive unwary pension savers. As a result, pension scams are on the rise.

There are now numerous approaches being employed by such con men including offers of free pension reviews, promises of improved returns, pension loans or early access to their pension cash. Some enterprising tricksters have even gone as far as recommending that savers transfer their pension into tiny occupational schemes to avoid legal scrutiny or sending couriers to your doorstep with urgent paperwork that must be signed on the spot.

The only people who benefit from these arrangements are the con men themselves. Those savers who are drawn in by such ruses and who might manage to access their pension pot before the age of 55 will quickly find that they’re subject to punitive tax charges which will take a massive bite from their hard-earned pension savings.

Make sure your adviser is registered with the FCA

The only way to ensure that you or your family are not the intended victims of a targeted scam is to make sure that your adviser is registered with the Financial Conduct Authority (FCA). This can be done by using the FCA register. If your daughter has any doubts about what she’s been offered or the person who has approached her, she might like to arrange a free consultation with her local Pension Wise office – a government-backed institution which provides free ‘guidance’ on all aspects of retirement planning.  

The Pensions Regulator has also produced a useful 10 step guide to spotting a pension scam including the need to be wary of unsolicited calls, texts or emails; checking out the FCA’s scamsmart; avoiding overseas investment deals such as hotels or vineyards and not getting pulled in by promises of ‘guaranteed’ rates of return or professional-looking websites or brochures.

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This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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