Radical new reforms introduced by Chancellor George Osborne to give retired people full control over their pension pots have won almost universal applause.
From next April, the over-55s can use their pension as a cash machine. They will no longer be pushed into buying an annuity, an income for life.
But honest pensioners wont be the only ones celebrating. Financial fraudsters are rubbing their hands with glee.
The sharks are already circling. You may already have encountered one or two yourself.
Months before the reforms come in, almost two in five people have received messages via email or text, inviting them to review their pension or release some of it as cash.
Worryingly, 26% said they were tempted to take up the offer, and 15% had actually contacted the fraudsters.
The research, by closed life fund consolidator Phoenix Group, is the first warning of what lies in wait next April.
Its going to be a bloodbath.
Ordinary people will suddenly be able to cash in pensions worth tens or even hundreds of thousands of pounds. This is money they have been saving for 40 years or more.
Unless youre careful, it wont be yours for long. It will belong to the sharks.
Many con-artists are so impatient, they wont even wait until youre 55. They will offer to liberate your pension at any age, even though that will be disastrous taxwise.
Steve Hyndman, head of financial crime prevention at Phoenix, says: People can lose their life savings through these scams.Their fees can be as high as 30%, in addition to the 55% tax charge you will incur for extracting money from their pot early.
Any money you have left over will be diverted into a thrilling investment opportunity. And then it will disappear. At that point, the nice man will stop answering your messages.
Life On The Line
Phoenix has already recovered 21 million in potential liberation fraud, from nearly 1,000 people. And this is only the start.
Protect yourself by refusing to answer those texts or emails, or putting down the telephone. Be particularly aware of anybody offering free government guidance.
Resist pressure to sign anything in a hurry. Especially if the crooks courier the documents to you. Once you transfer your money, its too late. Your retirement is ruined.
If suspicious, contact Action Fraud on 0300 123 2040.
Chancellor Osbornes reforms give pension policyholders some much-needed flexibility. But he has also handed fraudsters the opportunity of a lifetime. And its your lifetime were talking about.
Why bother with dodgy investment schemes when you can generate income of 5% or even 6% a year by investing directly in blue-chip stocks listed on the FTSE 100.
Many household names offer these high levels of income through their regular dividend payouts. You shouldn’t put all your pension into the stocks and shares, because markets can be volatile, but this can a great way of generating a higher potential return from a portionof your pot.
To find out how dividend-paying stockscould underpin your retirement income, download the Motley Fool’s latest FREEwealth report How To Create Dividends For Life.
This no-obligationreport won’t cost you a penny, so click here now for instant access.