SCAMMED SON DRIVEN TO SUICIDE

A distraught mother has spoken out after her son committed suicide as a result of a pensions liberation scam. Requesting total anonymity, she has told how her son, aged 40 when he died, had dreamt of a new life in southern Europe. He had been deluged with cold calls offering to unlock his pension pot worth £42,000 to fund his move. But when he finally acquiesced, he found the deal would only give him £17,000 while the £25,000 balance would go in “fees and legal expenses”.

However, he did not even get the £17,000 which was “invested” in a fraudulent scheme set up by the pension liberators. “He never received a penny of the cash,” said the victim’s mother, who was speaking as part of a combined anti pension fraud campaign combining the police, HM Revenue & Customs and The Pensions Regulator. She added: “The people behind this are crooks with no feelings; they are just after other people’s money. If anyone is tempted to take their offer, do not do it.”

In another development, Anna Riley (not her real name), 49, had just six years to wait before she could have legally accessed her £34,000 pension pot. But she wanted the money as soon as possible. She found a Pensions Liberator online and arranged the deal. Her £34,000 disappeared in charges and “investments”. But because she took her pension earlier than she should, HMRC can levy a special 55% tax charge on the proceeds, even though she has lost her funds. That equates to an £18,000 tax bill, money which she does not have. She may now be forced into selling her home. She admits: “I was stupid. I listened to what they had to say and just thought about what I could do with the money. “Now I wish I had checked it out with an independent financial advisor. I could lose everything and in the end, I got nothing.”

WHAT IS-AND IS NOT- ALLOWED

Most people will be free to take out their entire pension savings in cash once they reach 55 (or 57 from 2028), even if they remain in employment. Anyone under 55 attempting to access their pension faces a 55% tax charge (or 70% if they fail to report it to HMRC).

The first 25% of pension cash is tax-free. The rest will be taxed at the individual’s marginal rate; so many people could face a 40% charge. There will be no obligation to buy an annuity. Pensioners are free to draw down the money as they feel fit, but will want to withdraw at a rate that keeps them inside the 20% tax band.

If you are in a final-salary-style scheme that promises a regular income at retirement, you will almost certainly want to stick with it. But you will be free to switch it to a “defined contribution” scheme and then cash it in (subject to your marginal rate of tax).

There are different rules for public sector workers. Anyone in an “unfunded” scheme, such as nurses, doctors and firefighters, will not be able to access the cash (the government worries it might run out of money). But if the scheme is “funded” – such as local authority workers and the universities scheme – it can be transferred into a DC scheme and the money made accessible.

Bad luck if you retired recently and bought an annuity or specialist drawdown scheme. You will not be permitted to unravel it.

In US, the National Suicide Prevention Hotline is 1-800-273-8255. In UK, the Samaritans can be contacted on 08457 90 90 90. In Australia, the crisis support service Lifeline is on 13 11 14. Hotlines in other countries can be found here. 

Culled From Guardian.