SOMEWHERE in Westminster there’s a fag packet with George Osborne’s handwriting on it. On the back are the crude calculations that showed him how to swell HMRC tax coffers while simultaneously delighting taxpayers.
The result, of course, was the so-called pension freedoms that were introduced at such haste in April this year.
What the Chancellor and his supporters failed to recognise was the likely downsides and the unintended consequences. Namely, the dangerous combination of a lack of know-how amongst pension savers and the astuteness of fraudsters quick to cash in on the back of widespread public greed and ignorance.
Not to mention a lack of effective policing among insurance companies, government and regulators. Manna from heaven for the unscrupulous. Perfect.
Fed up with constant tinkering with pensions small print, not to mention a string of broken promises by our governments over the years – and added to a mistaken belief that one day we’ll return to the abnormal double-digit annuity rates of the 20 years after the mid-1970s – it’s hardly surprising that so many have rushed to cash in their funds without due care. Around £5 billion has been removed so far, apparently.
Not only have savers walked into shock tax bills, but too many have been easy prey for criminal elements dangling promises of early encashment, untold riches, or “guaranteed” retirement incomes well above the market rates.
There have been plenty of horror stories already. One chap insisted to the insurance company with which he held a pensions kitty of over £300,000 that they transfer it elsewhere so he could invest in parking spaces in the Sahara Desert. No, really. I’m not making it up. And that pension pot? All gone!
On an official pension scam warning website (www.actionfraud.police.uk/fraud-az-pension-liberation-scam) you can read up on how to spot a potential scam and what to do should it happen to you.
It tells the horror story of a man called Oliver and how he was relieved of his entire pension fund by falling for a series of honeytraps promised by a cold-caller supposedly authorised by the government.
It was the usual promises: higher guaranteed return, more cash, locking in qualifies for more annual cash, has to be a quick decision, and so on. To compound his misery he’s now being pursued for tax and fines despite being conned out of 15 years of pension rights.
Let’s face it, when has anybody ever phoned you from the government (or from a bank, for that matter) and promised you a free lunch? So do yourself a favour – take independent advice before you do anything daft.
Sadly the internet has helped let thousands of very crafty and persuasive conmen into our lives. Do not under any circumstances give out any financial information to anybody asking about passwords, account numbers and so on, and never put any such information on an email.
And if you think the person who’s phoned you on such matters is suspect, put the phone down to the side, leave the call open and go away for a couple of hours. Annoys the hell out of them, that does.
• Alan Steel is chairman of Alan Steel Asset Management in Linlithgow