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Since 2015 savers aged 55 and over have been able to access savings from their Defined Contributions Scheme under the ‘pensions flexibility’ rules. This means that funds can be accessed as a Lump Sum Payment, Lifetime Annuity, Flexi-Access Drawdown, Capped Drawdown or Short-Term Annuities.

This relaxing of the rules has proven to be a popular development as HMRC figures show that over £30.7bn has been flexibly withdrawn since that time

However, with greater access to these substantial pots of money comes an invitation to criminals to take advantage and 2018 figures from regulator the Financial Conduct Authority (FCA), reported that victims of pensions scams lost an average of £91,000 each to fraudsters; with two people losing more than £1million.

In January 2019 the Government made all pension cold-calling illegal, including from legitimate firms. Only firms authorised by the FCA or who have an existing relationship with the recipient and who have explicit consent are allowed to do so. Those breaking the rules face fines of up to £500,000.

But criminals operating pensions scams are unlikely to be deterred by the threat of a fine, so what can you do to avoid becoming their next victim?

According to the FCA “scammers usually contact people out of the blue via phone, email or text, or even advertise online. Or they may be introduced to you by a friend or family member who is also unknowingly being scammed”.

“They will make false claims to gain your trust including presenting attractive offers to persuade you to release funds to them”.

Scams often include:

  • Offers of free pension reviews
  • Promises of higher returns
  • Cash release options (if you’re under 55 this is highly likely to be a scam)
  • High pressure tactics – especially time limited offers or suggesting a courier can deliver and collect documents quickly
  • Unusual investments
  • Complicated structures where it isn’t clear where your money will end up
  • Arrangements involving several parties, all taking a fee, some based overseas
  • Long term investments – it could be several years before you realise something is wrong.

“If you’re contacted out of the blue about a pension opportunity, chances are its high risk or a scam” the FCA advise.

The FCA and The Pensions Regulator (TPR) have defined four key steps to give better pensions protection.

  1. Always reject unexpected offers – this includes phone calls, emails, online or postal.
  2. Check who you are dealing with. You can view a list of all authorised organisations on the FCA register.
  3. Don’t be rushed or pressured into making a decision. It takes 22 years for a typical saver to build an £82k pension pot, the average period of time victims had spent considering the scam offer was just  24hours.
  4. Finally, it is always worth seeking impartial information or advice.

If you have any questions, please get in touch. The Corinthian team are here to help.  [email protected]

According to recent reports from the Pensions Policy Institute and Close Brothers the gender and income divide remains alive and well in the world of pensions.

Women have often found their career and service progression interrupted by family commitments, the gender pay gap and career breaks and the overtaking of Final Salary Schemes by Defined Contribution schemes was seen as a positive move towards addressing this discrepancy. However, despite the fact that DC schemes can provide generous tax relief the recent research by PPI shows that this is disproportionally benefiting men.

  • 71% of the value of the tax relief is claimed by men
  • 69% of the value of the contributions are made by men (or employers on behalf of)
  • 68% of the total income earned by individuals claiming tax relief goes to men
  • 63% of those who benefit from the tax relief are men

These findings make worrying reading alongside previous figures from the PPI showing that there are 1.2million women in their 50s who have no private pension. 50% higher than the number of men.

In addition to the PPI findings a survey of 2000 people by Close Brothers indicated that, whilst average pension savings pots have risen an average of 8% for UK men since 2017, women’s have fallen 15%; and a 2019 survey by Censuswide found that 62% of female respondents were concerned about running out of money in retirement compared to 53% of men.

What can women do to maximise their pension savings?

“Women really need to be encouraged to start prioritising their pensions earlier in their careers” is the advice from Corinthian Benefits, “this will allow them to achieve maximum benefit from employer contributions, tax benefits and investments”.

“Women should also try to maintain pension contributions during maternity leave so as to keep NI credits towards their state pension.”

But what about those women who are already well down the career path?

“Increasing their regular contribution, even by a little, can make a difference to the final sum available” Corinthian suggest, “women tend to be less confident in their knowledge of pensions (just 5% described their understanding as ‘very good’ versus 18% of men)* and seeking appropriate advice at any stage is also a sensible option.”

If you would like to discuss your pension contributions, please get in touch. The Corinthian team are here to help. [email protected]

* Research conducted by Censuswide for AJ Bell between 08.02.2019 – 14.02.2019, with 554 respondents (aged 55+) that have entered pension income drawdown since April 2015. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.