How not to fall for pension scams and to keep your pension safe
If you fall for a pension scam, you could lose some or all of your pension fund.
In recent months there’s been a sharp increase in the number of fraudsters and rogue advisers contacting people and offering them a ‘free pension review’ in the run-up to the pension changes that came into effect on April 6th. Some of the fraudsters are very plausible. Be on your guard. Here are some of the common scams.
The 55% tax charge on pensions - how does it work and what's changing?
The government will abolish the 55% tax charge on pensions in April 2015 – what does the change mean?
If you save into a ‘defined contribution’ pension – one where the amount you have at retirement isn’t directly linked to your salary – there can be a nasty tax sting in the tail. For some people there's a large tax bill if they pass their pension onto others when they die. From April 6th 2015, this tax charge of 55% will be abolished. How will the change work?
Do you know how much tax you'll pay if you take money out of your pension?
Research shows that only one in three people know how much of their pension they pay tax on and many don’t know what they’ll pay
If you’re planning on taking a lump sum out of your pension after April 6th, make sure you understand how much tax you’ll pay on it. Research carried out by Yougov for SavvyWoman and Just Retirement shows that many people are confused about the tax rules on pensions. If you earn £29,000 a year, and have a pension fund of £17,850, you’ll pay tax at 40%.