The government has failed to combat the growing number of pension liberation cases which could see 90% of funds lost, MGM Advantage has said, following today’s Budget announcement.

MGM Advantage technical director Andrew Tully claimed this was a missed opportunity to clamp down on pension liberation schemes and protect people from massive tax charges. He added: “These pension liberation schemes may sound very attractive to people who are in financial hardship. But the possibility is the huge charges imposed by companies and the HMRC tax penalties can wipe out almost the entire fund.”

Last month, The Pensions Regulator launched an information campaign to crack down on incidences of false and misleading messages from companies that claim to be able to release pension cash as a loan or lump sum before age 55.

The campaign, in conjunction with HM Revenue and Customs, the Financial Services Authority, the Serious Fraud Office, the National Fraud Intelligence Bureau, the Serious Organised Crime Agency, Action Fraud and the Pensions Advisory Service, warned against spam text messages, cold calls and misleading website promotions that encourage savers to transfer their existing pension in return for a portion of the savings in cash before the age of 55.

UK pension legislation prohibits savers from accessing their pension savings until the age of 55 unless in an event of rare cases such as terminal illness.

Legislation stipulates that 75% must be taken in the form of income and 25% can be take as a tax-free cash sum.

Campaigners have warned that early access could result in hefty ‘unauthorised payment’ or tax charges.

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