Pensions experts are warning people not to fall for scams about early pension access amid the coronavirus pandemic.
Pensions experts are reporting a sharp increase in enquiries about early pension access as a result of coronavirus-related financial hardship.
Analysis by pensioners expert PensionBee suggests that those under 55 who have lost their income might be looking to their pension pot in this time of hardship after finding sites online offering to help them ‘sell’ their pension.
It warns that unscrupulous scammers could be targeting the most vulnerable via search engines and is calling for increased consumer caution.
Figures recently released by Action Fraud, highlighted a 400% increase in fraud reporting related to the coronavirus in the same month. PensionBee says it has also noticed an increase in enquiries about early pension release, compared to previous months. Analysis shows the average age of customers making enquiries about accessing funds early due to financial hardship was 35, 20 years younger than the legal age of access, which is 55.
It says attempting to take pension cash early can result in loss of the entire pot and a 55% tax charge from HMRC, possibly leading to bankruptcy. HMRC rules are in place to prevent early release so that the pension is available to sustain later life when working is no longer possible. Only in cases of extreme ill health or terminal illness would early access be allowed, usually signed off by a doctor.
PensionBee says it does not allow early pension release but is increasingly concerned with the number of sites using Google Ads to mislead the financially vulnerable with information that it is possible to ‘sell’ or ‘cash in’ your pension early.
If you do a Google search on ‘early pension release under 55’ several paid-for results come up to sites that ‘help
you cash in your pension at any age’. PensionBee says these businesses are unregulated and could provide
misleading misinformation about accessing a pension early.
It says: “Consumers should be aware that Google sponsored ads are not guarantees of reliability, and at times like this, should be mindful that pension scammers may use Google and similar search engines to target vulnerable people.”
It urges consumers to seek reliable sources of information and always cross-check any online information with Pensionwise, The Pensions Advisory Service, Money Advice Service, HMRC, and/or Gov.uk. When dealing with any financial services provider it adds that it is important to check they are regulated by looking at the FCA register. People can also check ScamSmart for the FCA warning list for firms to avoid.
Claire Reilly, Head of Corporate Development at PensionBee says: “COVID-19 has put us all in unchartered territory. Scammers prey on fear around economic uncertainty to mislead savers and are increasingly using search engines to add a layer of legitimacy to their operations.”
Meanwhile, SunLife’s Finances Over 50 report says its research, based on a survey of 3,000 over 50s, shows that 33% of over 50s do not think they have enough money to provide enough income in retirement, rising to 36% among women. Only 13% think they have enough money to live comfortably in retirement.