Illegal ‘pension liberation’ scams have seen middle-aged people lose an estimated total of £400m from their pension funds since 2008, according to The Pension Regulator’s chief executive Bill Galvin.

The scams involve a cold call, text or email inviting an individual to unlock money from their pension before they reach the age of 55. The money is transferred into an illegal fund where it disappears in charges or fake investments.

Speaking on BBC Radio 4’s Money Box programme, Galvin warned: “Some of the vehicles that we are aware of involve someone stating that they will offer to provide an individual with half the value of their pension and the other half is invested overseas. There is a significant administration charge of up to 10 to 20 per cent made and then the individual finds out that they have to pay a tax charge of between 55 and 70 per cent on the amount that they have been given. So you could easily transfer a pension pot of £20,000 into a net value of about £4500 by the time all these things have been done.”

Galvin said that these scams are occurring due to “more and more people finding themselves in challenging economic circumstances and more and more people are looking to take advantage of that”.

He added that over the last 18 months a number of pension vehicles used for ‘pension liberation’ purposes have been shut down and that the TPR and the police are to launch a new campaign to combat such pension scams involving leaflets warning of the consequences of replying to these calls.

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