Pension scams: Britons warned over criminals offering inheritance tax loopholes | Scams
TThe caller says a lot. Transfer and reinvest the money you’ve saved in retirement into an offshore scheme where you can avoid being caught out by changes to the UK’s inheritance tax (IHT) system next year.
From April next year, after your death, any remaining money in your defined contribution pension, which consists of most workplaces and all private pensions, will be withdrawn into the IHT network.
The upcoming change has caused you some anxiety, so this opportunity looks promising. However, there is no new plan. It was created by criminals who aim to exploit people’s concerns.
Standard Life, one of the UK’s largest pension providers, has warned that such scams will become more common ahead of changes in April 2027.
Standard Life’s Donna Walsh says although the new rules won’t affect everyone (the basic tax-free threshold for a property is £325,000), scammers will take advantage of any confusion to persuade people to withdraw money from their pensions.
“With these changes, people are becoming uncertain and a bit confused about what they can do, what they can and can’t do, and that’s exactly the kind of circumstances that scammers are ready to exploit,” he adds.
what does it look like
Scams often start with out-of-the-blue emails, calls or messages.
They may offer a free review of your pension or access to a high-yield scheme or investment, and are often based abroad.
According to the Pensions Regulator, common phrases used by scammers are “pension release”, “loan”, “gap”, “savings advance”, “one-off investment” and “cash refund”.
Criminals often try to apply pressure by telling you that you have a limited time to accept the offer.
Once someone agrees to transfer their money, scammers will often coach them to answer their pension provider’s questions about why they are transferring their funds.
“The provider asks these questions to try to protect the protector, but the scammer then coaches them on how to get around these questions,” says Walsh. “Our teams are trained to detect this.”
What should we do
Be careful if you get a phone call. Cold calling regarding pensions is illegal, so be skeptical of any unsolicited approaches.
As with all scams, scammers want you to act impulsively and alone, so don’t make hasty decisions and get a second opinion.
Financial Conduct Authority an online tool You can use it to check whether a company is authorized or not. If you want to make changes to your pension, you may want to speak to a regulated financial advisor. government supported MoneyHelper service can help you find one.
“Those with larger capital may be considering how best to pass on the wealth, particularly where pensions could face inheritance tax and subsequent income tax for beneficiaries,” says Mike Ambery of Standard Life.
“For some, this may involve long-term planning or gift-giving decisions, but there is rarely a one-size-fits-all answer. The important thing is not to rush into action, especially if someone is trying to find a ‘quick fix’ or playing on fear.”
If you think there is a scam you should report it to: Report Scam.
