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Expat Pension Advice

How to Know If You Are Being Pension Scammed

A pension is among the most prized investments of a British citizen, offering financial stability upon retirement. Among the many genuine, legal entities in the market offering reliable, long-term pension planning services, there is a handful of those with unscrupulous intent who attempt to purloin your hard-earned money for the dubious benefit of a select few. Pension scams can have a devastating effect on the quality of your life. It can affect when you are able to retire and how much income you can have upon retiring. Modern-day bluff-mongers are as numerous as they are highly adept at enshrouding their unethical practices behind near-convincing facades in the marketplace, actively thwarting the authorities’ best efforts to crack down on same. They are also highly competent in mobilising a spectrum of calculated and elaborate ruses to promptly part you of your money. So how can you, a prudent pension holder, be wary of attempts that seek to circumvent you? Here a few warning signs that should better prepare you for a potential encounter:

Unsolicited Engagement Techniques

Registered financial services firms are bound by a code of conduct that discourages unsolicited engagement techniques such as cold-calling—cited as a dominant means by which shady investment managers capitalise on unsuspecting clients. A survey carried out by Citizens Advice revealed that nearly 80% of the people who were reached by bogus retirement planners, were cold-called. If you are subject to such an unbidden confrontation, it is best to don a veil of scepticism in processing the content that is shared thereafter. Be wary of standard suave, and often vague, business-speak and never close a bogus deal without taking your own time to gain leverage over the discussion, request for additional details, review your options (perhaps in consultation with a loved one or mentor, which is proven to be more effective), and run an independent background check with local authorities.

Guaranteeing Unusually High Returns

When discussing returns or profits, it is apt to reflect on the age-old adage in economics that states, ‘there ain’t no such thing as a free lunch’. “[the phrase is used to] describe situations in which investors are not able to consistently make large profits without bearing the risk of a potential loss”, explains Investopedia. Accordingly, when being offered products that yield very high returns, these are likely to be unregulated and exposed to high risk, be unstable over the long-run, or simply be a fictitious placeholder for imminent theft of funds. A vigilant investor must always evaluate a promise of a greater return against the standard set by the British government and its regulatory bodies (which is to seek professional advice from an expert).

Exotic Overseas Investments

When considering an overseas transfer of your pension scheme (which incidentally is legal), a genuine investment manager will dedicate time to determine your investment expectation and risk appetite before presenting a tailor-made investment strategy that suits your individual case, placing great emphasis on regulatory aspects and costs involved. In contrast, a delinquent investment shark will greatly emphasise on the ‘high-yield overseas investment’, often discussing exotic deals such as investment in unregulated financial products, overseas property development (most often in troubled economies), rainforests, fine wine, struggling (or even failed) businesses etc. They actively side-track the client from exploring the overall value proposition whilst ensuring that their so-called ‘investment products’ portray an unrealistically rosy outlook in order to entice unsuspecting pension-holders into promptly parting with their hard-earned money.

Offering Free Pension Advice

Whilst it is possible for a registered financial services company/adviser to offer an initial meeting free-of-charge that solely revolves on introductions (to give credence and context to their qualifications, competence, work history, and employed firm), it is highly unlikely that in-depth and case-specific professional consultation is conducted free-of-charge. In the event that you are approached by an ‘adviser’ offering consultation at no cost, the Financial Conduct Authority recommends that you verify the authenticity of the firm. This can be done online. Additionally, you can view the standard rates associated with such services by visiting the Money Advice Service website.

Offering Destructive ‘Pension Liberation’ Options

These services attempt to entice unsuspecting pension-holders into committing misguided actions that connote high legal and fiscal consequences by leading them into believing they can access their pension pots before reaching the statutory retirement age of 55. If you do fall prey to such scams, you will soon find that ‘unauthorised withdrawals’ are taxed between 55%-70% by the HMRC, depending on the volume of your withdrawal. Meanwhile, unscrupulous firms can also cream off commissions of up to 30% from the amount transferred, leaving victims with little of their original savings. It has been estimated that between £500 million and £1 billion of these assets have already been pilfered through such means by racketeers. It is evident that British citizens and expats are likely to experience a call from a bad-investment house at one point in their professional lives. Do NOT sign any documents without exercising due diligence. Holborn Assets are committed to ensuring that all clients opting for a reliable pension scheme receive a consistent service standard that is on a par with the best practices recommended by regulatory bodies within the countries that we operate in. Get in touch with a qualified financial adviser today!

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