What Is Pension Liberation Fraud?

Ian Lewis[1]

Ian Lewis

Money Savings Advice What is Pension liberation fraud

In recent times we have seen an increase in pension liberation fraud, which can prove extremely expensive for victims. If you have transferred your pension fund to an unregulated scheme, before the age of 55, you should take advice immediately.

There are many red flags when it comes to potentially fraudulent activity with your pension fund. It is vital that you remain aware at all times!

We live in difficult financial times, unemployment is expected to rise, and the economy has struggled after a number of challenges. Therefore, it is no surprise to learn that many people are looking for ways to release their pension funds before the traditional date – their 55th birthday.

There are some situations, many of which are medically related, where funds can be accessed early.

However, in the vast majority of cases, where promises of early access have been made, there can be huge life-changing consequences.

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What Is Pension Liberation Fraud?

When transferring your pension fund to an unregulated scheme, prior to your 55th birthday, your regulatory protection disappears. These activities often give fraudsters access to all or a significant portion of your pension fund. Unfortunately, there is no talk of HMRC tax penalties - which can be between 55% and 70% of your pension pot.

This is the penalty for those who access pension funds prior to their 55th birthday, without the traditional exemptions. Pension liberation becomes pension liberation fraud when you are not made aware of the scenario.

How Do Pension Liberation Fraudsters Make Their Money?

There will be occasions where your funds are not under the control of the fraudsters. In these scenarios, what you tend to see is that the fraudsters will claim a commission which can often be as high as 20% of your fund.

When you bear in mind the additional charges by HMRC, together with the 20% transfer charge, many pension holders have been wiped out. They have literally seen their pension fund bled dry by HMRC penalties and transfer charges to the fraudsters.

Can I Access My Pension Fund if I Have a Terminal Illness?

For many pension schemes, this is the only way in which you can access funds before your 55th birthday. It is very important to check with your pension provider about the specific terms and conditions regarding terminal illness.

It is commonplace to allow pension holders access to these funds early, to assist with any medical-related financial challenges and unexpected costs/loss of income. It is important to stick to the correct process when releasing funds early as a consequence of illness. Failure to do so can be expensive!

What Are the Early Signs of Fraudulent Activity?

Unsolicited calls were made illegal with regard to pension advice back in January 2019. So, if you receive an unsolicited call from a “pension expert,” you would be foolish to take them at face value. Many of the fraudsters will disappear as quickly as they emerge, although some will be regulated and simply acting against the best interests of the client.

If you come across a regulated financial adviser carrying out unsolicited calls, then you should make the regulator aware of the problem. The Financial Conduct Authority (FAC) is the regulator for UK financial services. The Pensions Regulator is the UK regulator for workplace pension schemes.

Why Do Some Advisers Pressure You to Sign Up on the Day?

We have heard it all; there are no spaces left, today is the final deadline, we are doing you a favour, and all of the other salesman lines. No financial adviser should ever pressurise you to sign up to, in this example, the transfer of a pension fund.

You also need to be aware of those who make “false promises,” which may go against even the most basic of regulatory protection. If it looks too good to be true, it probably is too good to be true!

Are There Really Ways to Access Pension Funds Early?

When being targeted by pension liberation fraudsters, you will no doubt come across terms such as loopholes, tax breaks, overseas investments, and “new investment techniques.” Fraudsters will very quickly try to get you onside by promising you early access to your pension fund.

As soon as they see your eyes open wide at the prospect of early access, they will think they have hooked you. As we touched on above, there are circumstances relating to medical conditions where you can access your funds early; these are exceptions.

If somebody approaches you and offers access to your pension funds before your 55th birthday, be cautious, be very cautious.

Should I Take Independent Financial Advice?

The chances are you already have an adviser for your pension assets, whether a personal pension or a works pension. If so, you should contact them immediately after your conversation with the unsolicited third party. They will be able to advise you about ways in which you can protect your pension fund assets.

You will also likely be reminded that from January 2019, it has been illegal to make cold calls regarding pension fund assets. If you don’t have an independent financial adviser, find one quickly!

Be Aware of Pension Loans, Savings Advances, and Cashback Payments From Your Pension

When pension fraudsters approach you, the mere mention of terms such as pension loans, pension savings advances, and pension cashback payments should raise the alarm. Unless you are legally able to access your pension funds, these products are worthless, and you will have no protection from the regulator.

It can be very easy to get caught up in the moment, especially if you are experiencing financial difficulties, but be very careful about your pension fund assets. They should last you a lot of years!

Money Savings Advice Tip

Sadly where there is money involved there are unsavoury people who look to take advantage. If you feel you have been the victim of pension fraud and have lost money from your pension then we advise you to speak to a professional who can manage your claim properly.

Can I Sue for Bad Pension Advice?

One of the more common traits regarding pension liberation fraud is the fact that the advisers can be there one day, gone the next. In theory, you could sue them for bad advice, but you may have difficulty finding them.

Interestingly, if you were introduced to the fraudulent party by, let say, your bank or another financial adviser, then you may be able to sue them for negligence. If they fail to undertake due care when recommending you to another party, they may be leaving themselves wide open to compensation.


Despite the fact, the majority of people know that they can’t access pension fund assets until a minimum age of 55, the carrot of early access is all it needs for the fraudsters. Even if the “advisers” had found a way around current HMRC regulations, this doesn’t stop HMRC from introducing retrospective penalties. Ignorance is not an excuse!

How Can Money Savings Advice Help You With Making a Mis-Sold Pension Claim?

Here at Money Savings Advice, we have partnered with some of the UK’s leading Financial Claims management companies. They have already helped thousands of people claim compensation for a mis-sold pension and they can do the same for you.

Choosing an independent claims management company means they won’t proceed with a claim unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these claim management companies who can help you make a compensation claim, then click on the below and answer the very simple questions.

Money Savings Advice Author Ian Lewis

Ian Lewis

Ian Lewis is one of our specialist financial writers. Ian has over 15 years of financial writing experience, having worked for some of the largest financial publications in the UK covering topics from mortgages, equity release, loans and financial claims, to name a few.

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