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First arrests made to crackdown on pension fraudulent schemes

Monday, 20 May 2013

City of London Police has made initial arrests in a multi-agency operation to dismantle firms which trick savers into believing they can access their pension early.

An organised crime gang understood to be cold-calling and text messaging pension holders across the UK with fraudulent offers, "that could destroy their retirement plans", has been dissolved by City Police.  

Back in February it was revealed how a taskforce was being formed to tackle the so-called "pension liberation" scheme. Countless bodies have now come together to create the taskforce: The Serious Fraud Office, the Serious Organised Crime Agency (SOCA), the Home Office, the Pensions Regulator, the Financial Conduct Authority, Department for Work and Pensions, the Information Commissioner’s Office (ICO), and HM Revenue & Customs have all been involved.

After an increasing number of reports to the Action Fraud hotline, detailing how people were losing their pensions after being promised with better returns and tax free advances, the National Fraud Intelligence Bureau comprehended the need for action and accordingly the agencies were pulled together.

Current pension laws prevent withdrawal of money before the age of 55 (previously 50 in 2006) however once reached you can take 25% of your savings tax-free. The financial turbulence of recent years has undoubtedly contributed to the appeal to withdraw money early, hence the widespread presence of such fraudulent schemes.

According to the Information Commissioner’s Office reports, spam text messages relating to accessing pensions had more than tripled in the past six months. Moreover, one in eight spam messages sent in March related to pensions.

An estimated £400m has been released into high-risk and non-existent investment schemes, many of which are based overseas, leaving thousands of people defenceless victims. Some of this money has been irrecoverably lost to fraudsters, with victims also being slapped with unforeseen tax bills - having withdrawn beyond the 25% mark – and undisclosed administration fees. 

An office in the Square Mile was raided by Detectives from the National Lead Force, a fraud division of the City of London Police. A call centre of up to 40 staff was operating at the location. Three men were arrested and a computer and documents were seized.

Further arrests were also made across the UK: Police Scotland with SOCA simultaneously arrested two men in Ayr and Glasgow, while additional arrests were made in Cheshire.

Commander Steve Head of the City of London Police said: “Pension liberation fraud is the new boiler room fraud phenomenon as fraudsters seek to exploit new opportunities thrown up by the changing economic climate. The promise of maximising returns on your pension savings may seem to make good financial sense but the reality is you could be falling into a terrible trap which has the potential to destroy your retirement.

“People should think long and hard before releasing pension funds early and anyone who is cold-called or text messaged with this or any other type of investment opportunity should put the phone down and not reply to the message.”

Pensions Minister Steve Webb said: “Pensions liberation fraud is a crime and we along with the police and others across Government are cracking down on these schemes.

“The promise of easy money when times are tough is all too tempting, and there are far too many unscrupulous people who will play upon this. If you are offered a deal to unlock your pension, don't touch it."

Evidently, regardless of the economic climate those with a pension should not be tempted into such schemes that could potentially ruin their retirement. Always remember the golden rule of NEVER giving out financial or personal information to cold callers or unconfirmed legitimate bodies.