In July 2015 the Financial Conduct Authority (FCA) sent a request for data to all pension and retirement providers, seeking information about the new pension freedoms. They have now released a report with their findings.
In April 2015 the UK Government announced that anyone over 55 could now take their private pension as a lump sum, paying no tax on the first 25%, and have the rest taxed as if it was a salary at the regular income tax rate. It doesn’t apply to state pensions.
The FCA researched the new pension freedoms and asked providers about the following:
- Consumer access to the pension freedoms.
- Financial advice requirements and the treatment of insistent customers.
- Pension transfer procedures.
- Exit charges.
They collected this information to help with their supervisory and policy work and have produced an in-depth report.
They found the following:
- Nearly 205,000 pension policies had been accessed within the three months following the pension freedoms being announced.
- Over 71,000 people had accessed some form of income drawdown option.
- Nearly 121,000 people had accessed some form of cash withdrawal.
- There were just 12,418 annuity sales in the first three months, compared with 89,896 for the same period in 2013.
- 84% of people over 55 have not experienced any exit charges. That’s around 3.4million people.
- And it takes, on average, 16 days for pensions to be transferred.
When you consider accessing your private pension, you must consider if by doing so, you will still have enough money to retire on. If you keep your money in your pension it should hopefully continue to grow.
Sadly, there are people out there who are taking advantage of those now eligible to access their private pensions. Be careful of anyone that is promising you a high return investment scheme as a way to make the most of your pension. Scammers want to get their hands on your newly obtained cash. They promise the world, but actually give you nothing in return.
Craig McAdam is a Principal Lawyer within Group Litigation at Slater and Gordon Lawyers in Manchester.
If you have, or fear that you have, been a victim of a pension investment scam, then please contact our specialist financial litigation team at Slater and Gordon. Call us on freephone 0800 916 9015 or contact us online and we will call you.