Muddy waters

I received an enticing text message recently. It read: "You can now unlock your frozen pension prior to 55. Release cash from your pension today, just reply YES and we will post you a FREE information pack today."

This scam is well known to HMRC, the Serious Fraud Office, the Pensions Regulator, the police and other official bodies. And I am fully aware unlocking pensions before age 55 is illegal and carries a whopping 55 per cent tax charge. However, I replied "yes".

Ten minutes later, I got a phone call from 'Company A', apparently in Hampshire, which asked a few basic questions then put me through to the very friendly 'Pete' at 'Company B', apparently in London.

Pete asked a few more questions about the value of my pension, my age and what I might need the extra cash for. He said I could get a loan of 30 per cent of the value of my pension. I asked how much the loan would cost. Even though I rephrased the question several times, I never got a straight answer. (After digging on the internet, I think the fee is a staggering 30 per cent of my pension's value.)

Pete tried to get a courier to deliver the letter I had to sign to my home two days later. Why use a courier I asked naively? Silly me!

The courier would turn up on a motorbike with one piece of paper, I'd sign it and they'd ride off with it. Pete explained this was to speed up the process. "You want your cash as soon as possible, don't you, Mr Challinor?" he asked.

Startling wording

I managed to defer the courier until Pete had sent me more information by email. No email arrived, but after three days I received post from 'C Administrators Ltd'. It enclosed a letter of authority with the following startling wording: "I hereby appoint C Administrators Ltd to act as my authorised representative in all matters concerning the below policy, which I hold with your company and I authorise you to discuss with C Administrators Ltd any information they may require to facilitate the transfer of the above policy to the 'XX retirement benefit scheme' - which I hereby authorise."

Wow! Just one piece of paper, no information and a courier to collect it and I've authorised the illegal transfer of my pension.

Was there a key features document? Risk warnings? Advice? Regulation? Not a chance.

And who exactly are C Administrators and XX? Strangely, both companies were registered with Companies House in January 2013. This was all starting to smell bad.

I then received another phone call from Pete, who was phoning from a loans company, not Company B, which I initially suspected because he represented it the first time we spoke. Despite querying the legality of all this, Pete assured me there was no possibility of incurring the 55 per cent tax. He was less sure about the tangled web of companies involved.

The loans company was registered at Companies House on 20 February 2013. Hmmm And Pete had no idea who C Administrators or XX were as they "use a variety of administration companies" to complete such matters.

Pete quite rightly detected I was asking far too many questions about this, suggested it wasn't for me and that "we should part as friends".

Well, life's too short to fall out with him over this, but not short enough for me to happily hand over 85 per cent of my pension.

Modern curse

This scenario is almost the same as a case study in the Pensions Regulator's action pack on pension liberation fraud, which is well worth a read if you haven't done so already. In fact, ask all your clients to read it too.

Unsolicited text messages, phone calls and emails are becoming the modern curse of our times. And they are sent in mass volume to con unsuspecting people out of their pension savings.

Sadly, the recipients nearly always have no idea that it is perfectly possible to lose at least two-thirds of your pension's value through such 'liberation'.

Philip Challinor is a chartered financial planner and director at Chatfield Private Client

More on pension liberation fraud

Copyright & permissions