Pension reforms due to be introduced in April 2015, will not only result in a huge number of elderly Brits running out of money but will also give rise to the ‘great pension swindle’, financial comparison site PayingTooMuch.com warned.
Calling for better consumer ‘safeguards,’ Michael Ward, Managing Director of PayingTooMuch.com is urging those approaching retirement to be diligent about cold calls, texts, and even glossy websites and to take steps to protect themselves.
He said: “Get rich quick scams are about to increase significantly following the looming pension reforms and consumers should be on red alert.”
He continued: “If you are in doubt at all about a firm, check the Financial Conduct Authority’s register to see if it is legit.”
The 2-step check-list for retirees:
1: Contact the Pension Advisory Service on ‘0300 123 1047’ to check whether they have heard of the company you are considering moving your pension to.
2: Also check the Financial Conduct Authority (FCA) register to ensure both the broker and pension fund manager are approved. Those that do not appear on this register should not be trusted with such an important asset. You can find more information about that here: http://www.fsa.gov.uk/register/firmSearchForm.do .
According to Ward, it is not just scams retirees should be cautious of, it is also poverty too as concerns mount that retirees will take cash from their pension pots to fund a temporary increase in standard of living.
He said: “There is a very real risk that this well-intended decision to allow more pension freedoms, could turn into a nightmare for pensioners who fall into the trap of spending too much too quickly and end up running out of cash. It will be their families – the squeezed generation - who will be left picking up the pieces but if they can’t afford to, what then?”
He added: “Consider carefully how you should use your assets to produce a smooth income flow for the next 20 years, long after the sun tan from this year’s holiday has faded.
“It is also worth considering seeking financial advice - which is likely to cost from £500 upward – as well as placing some of your pension money into an annuity which is a regulated financial product that guarantees a regular monthly income for life, regardless of how long you live.”
About PayingTooMuch.com: PayingTooMuch.com is a leading independent price comparison website providing customers with the widest range of financial products and unrivalled customer support. The company mission is to be the best, most up-to-date and unbiased price comparison website in the UK, helping people keep their personal finance bills down. To find out more visit: www.PayingTooMuch.com