Pension liberation - beware the scammers!
The term Pension liberation is the transfer of a person’s pension assets to
a situation that will enable them to access those assets prior to
the age of 55. There are provisions for the legal transfer of assets from a
pension prior to age 55 in certain situations, such as in the case of an
illness that would be deemed terminal, for example, but for most people many of
these instances are not legitimate, and could possibly cause a serious adverse
tax situation as well as high fees.
People can often become targets of scams through websites, direct mail, text
messaging and other promotional techniques. People who have an urgent need for
cash could easily become targets for pension liberation schemes. It is very
important for people to realize who they are dealing with in a situation such
as this. People should have someone they trust in the financial community who
can advise them sufficiently so that they do not get scammed.
There are programs which can legitimately free up pensions, but these are very
few in number and not freely available to the general public. Many schemes out
there are just scams designed to separate unwary individuals from their hard
earned pension funds.
The downside of a pension liberation fraud scheme is that most certainly there
will be less money for retirement if a person falls prey to such a scheme,
simply because they have already used the money, if they remove funds for any
reason other than for producing a retirement income.
Usually, the person will be charged a commission or exceedingly high fees of up
to 30% of the proceeds of those total assets of the pension. This amount
is exorbitant and unnecessary.
The victim will also be misinformed as to the potentially high tax
consequences of the transaction, in order to minimise any objections which could
stop the transaction taking place.
If a person takes money from his pension
prior to when it can legally be done (generally after the age of 55), significant
taxes will be charged. Usually this fact is minimized by the schemers,
resulting in a tragedy for the victim. If a person does withdraw funds from his
retirement account prematurely, they are obligated to inform the tax
authorities, or they may be charged interest and penalties in addition to any
taxes that might be due.
It is always a good idea to tread carefully when someone brings you an
unsolicited idea that seems to be unbelievably good. If you can take the idea
to a person or firm that works in the arena of financial planning and get a
valued opinion on it, it could save a great deal of money and heart ache. It
would be a shame to have to look back and be remorseful about having been
talked into a pension liberation scheme and only have regrets to show for it.