Tag: fraud

All change for pension options

But beware of pension fraudsters 

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The rules on how you can access your defined contributions pension savings from age 55 change from today. Changes to pension rules will give savers much more control over their money – but some industry experts fear that the changes will see a new wave of cold-calling, fraud and criminal activity.

The government is advising people not to take cold calls from fraudsters posing as pension professionals. Pensions minister Steve Webb – who himself was cold-called by fraudsters – acknowledges that there are risks involved with making pensions savings easier to access.

“A lot of people will have access to a lot of money come April, and there’s a bunch of crooks out there,” he said. “People should take professional advice. Pension Wise – our service – is the place to go. Not somebody who cold calls you.”

The GMB trade union is urging the Information Commissioners to crack down hard when dealing with cold callers threatening the pension pots of millions of UK savers.

GMB commented last week on the statement from the Information Commissioners Office (ICO) that they are investigating claims that details of the pension pots of millions of people are being sold and ending up in the hands of cold callers. See notes to editors for statement by ICO and reports on Press Association.

Phil McEvoy, GMB National Pensions Officer, said: “This is a worrying example of the activities that look certain to accompany the new freedoms on pensions.

“History does not look kindly on pension deregulation with the mis-selling scandals of 25 years ago showing that freedoms can simply induce a feeding frenzy amongst the scavengers seeking to deprive savers of their money.

“It looks like the vultures are coming home to roost again. It is imperative that the ICO as regulator throw the book at anyone threatening the future finances of UK’s pensioners.

“ICO should not hesitate to use its power to issue penalties of up to £500,000 where marketing calls or messages cause or have the potential to cause substantial damage or distress.”

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Access your savings

From today (6 April), from age 55, you can access as much of your savings from your defined contributions pension scheme (also known as ‘money purchase schemes’) as you want under new ‘pensions flexibility’ rules.

Schemes don’t have to offer these options. Talk to your pension provider to see what options are available to you.

You can transfer your pension savings to a pension provider that offers the option that you want to use.

You can access your benefits in a number of different ways:

Lump sum payment

You can take money direct from your pension pot without having to buy an annuity or put the money into drawdown, and 25% of this sum will be tax free. This is called an ‘uncrystallised funds pension lump sum’ (UFPLS). You can take one or more UFPLS payments and these can be regular or irregular payments.

If you receive a UFPLS and this is the first time you have used the pension flexibility rules to access your pension savings, your scheme administrator will provide you with a flexible access statement.

Lifetime annuity

You can use some or all of your funds to buy an annuity that will be payable at least for the rest of your life.

You can take a tax free lump sum of up to 25% of your pension pot when you buy an annuity. This is called a pension commencement lump sum.

Flexi-access drawdown

You can put funds into drawdown. From 6 April 2015 there are no limits on how much or how little you can take from your drawdown fund each year. You can take a tax free pension commencement lump sum of up to 25% of your pension pot when you put funds into drawdown. Any drawdown payments are taxed as income.

If you receive a flexi-access drawdown payment and this is the first time you have used the pension flexibility rules to access your pension savings, your scheme administrator will provide you with a flexible access statement.

Capped Drawdown

You can continue in capped drawdown if you were in a scheme before the changes, but no new capped drawdown funds or flexible drawdown funds may be set up from 6 April 2015 onwards.

If you are in capped drawdown you may either convert your fund into a flexi-access drawdown fund or continue to take a capped drawdown pension from your arrangement. Speak to your pension scheme administrator if you want to convert to flexi-access drawdown.

You can add additional funds to your existing capped drawdown arrangements and your existing annual pension limits and review periods for capped drawdown will continue to apply. Capped drawdown payments are taxed as income.

Short term annuities

If you are in drawdown you can decide to receive benefits in drawdown by purchasing short term annuities. These are paid by insurance companies at least annually and for no more than 5 years.

Overseas pension schemes

Changes made to the legislation covering pensions savings in overseas schemes bring them in line with the 2015 changes made to the rules for UK registered pension schemes.

These changes affect:

  • qualifying recognised overseas pension scheme (QROPS) – schemes that can receive transfers from registered pension schemes as authorised payments
  • currently relieved non-UK pension schemes – where UK tax relief has been given on or after 6 April 2006 in respect of pension savings under the scheme

Collectively, these schemes will are known as ‘relevant non-UK schemes’ and will be subject to similar rules as UK registered pension schemes.

Tax on payments and contributions

All payments you receive from an annuity or drawdown are taxable as income. You also pay income tax on 75% of the amount of any UFPLS you receive. The amount of tax you pay will depend on the amount of payments that you receive in the tax year plus any other taxable income you have.

You’ll also pay tax on any contributions you make to your pension pot over your tax-free annual allowance.

You can find more information from GOV.UK guides on:

Further Information

Pension Wise is a free and impartial government service that helps you understand your new pension options.

Police warn of ‘bank’ phone call scam

imagesPolice are warning members of the public to be alert to phone calls from criminals who claim to be working for banks. The fraudsters frighten victims into believing their bank accounts have been hacked – and then persuade them to transfer their savings into new ‘safe’ accounts. 

The fraud works like this:

A phone call is received from a male pretending to be from their bank’s Fraud Department. He informs the victim that there has been suspicious activity on their bank account and asks them to call the helpline telephone number on the back of their bank card in order to verify his position at the bank.

The alarmed victim does this – but unbeknown to him/her, the caller keeps the telephone line open (there will be no dial tone). The phone call is then  ‘answered’ by a female and she was then ‘transfers’ the victim over to another male who claims to work in the bank’s Fraud Department.

He advises the victim that that their finances are at risk of fraud and they must transfer their money into ‘safe accounts’ immediately; he then manipulates the unsuspecting victim into transferring their savings into these new ‘safe accounts’.

A call of this nature is upsetting, and that’s what the fraudsters rely on – they stress the urgency of the need to act NOW to protect your funds and they don’t give victims the time to think.

If you have even the slightest of concerns or are suspicious in any way, hang up and use a mobile phone to call your bank – always call back from a different phone. 

Honest motorists to benefit from insurance fraud crackdown

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The price of an average motor insurance premium has seen a record fall of more than £100 over the past year, according to the latest AA statistics. The Westminster Government says reforms to tackle the growth of compensation culture and help hardworking people have made a major contribution to this fall.

The government has now pledged to do more and it has welcomed assurances from the insurance industry that they will continue to do their part by passing on any savings that result from these reforms straight on to customers.

Despite the fall in average insurance premiums, recent figures from the Association of British Insurers have shown that the number of dishonest motor claims increased by 34% to a record 59,900 in 2013, with a value of £811 million.

A new package of measures to tackle insurance fraudsters and dishonest claims has been announced which will reduce the amount being paid out unnecessarily by insurance companies on fraudulent claims and enable them to pass on savings to honest customers.

These will affect bogus claims, both motor claims and others such as ‘trips and slips’ at work and in public places.

They include:

  • Requiring courts to throw out compensation applications in full where the claimant has been fundamentally dishonest – to stop people who have had an accident from exploiting the system by making bogus claims or grossly exaggerating the extent of their injuries
  • Plans to ban lawyers from encouraging people to make claims by offering them incentives like cash or iPads
  • Reducing questionable whiplash claims by improving medical assessments, ensuring they are only conducted by independent accredited professionals, and setting fixed fees for medical reports this year
  • Introducing new rules this year to restrict the practice of settling whiplash claims without confirmation of the claimant’s injury.

Justice Secretary Chris Grayling said: “We are making sure we do our bit to help drivers with the cost of running a car, and putting money back in their pockets.

“Insurance premiums have fallen by record amounts over the past year as we have turned the tide on the compensation culture but there is more to do. We are continuing to go after the fraudsters who force up costs for honest drivers.”

The new measures are the latest stage of the government’s delivery on the commitment to deal with high insurance costs made by the Prime Minister at an insurance summit in 2012. The latest Association of British Insurers average motor insurance premium tracker shows the average price of fully comprehensive insurance cover has reduced by 14% over the last year.

UK Government Roads Minister Robert Goodwill said: “The costs of owning and running a car are felt by millions of households and businesses across the country and this government is determined to help keep those costs down. Insurance premiums have fallen but we are keen to do more with the industry to drive down costs further.”

Association of British Insurers Director General Otto Thoresen said: “These changes are a very positive development for the vast majority of honest insurance customers who end up paying for the fraud of the minority. We applaud the decision to ban the distasteful advertising which offers cash or other inducements for personal injury claims. This only serves to reinforce to unscrupulous claimants that there is a compensation culture to exploit.”

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