Public warned over pensions scheme
BBC News, May 3 , 2002
Occupational Pensions Regulator (Opra) has issued a formal warning against
"pension liberation" schemes.
Maunsell, chairman of Opra, issued an official warning to members of the
public on Friday.
liberation schemes, are sometimes referred to as "trust busting"
and they claim to convert a pension into a tax-free lump sum.
Inland Revenue is currently investigating as many as seven schemes.
schemes" are attracting people through adverts and door-to-door
are very attractive to people who urgently need cash, as the companies
turn pension benefits into a tax-free lump sum.
company offering the service usually charges high commissions ranging from
20% to 30% of the individual's total fund.
are often arranged using offshore companies and bank accounts.
the individual's existing pension scheme will receive a request from the
pension liberator to transfer their pension money to a scheme in the name
of a fictitious new employer created solely for the purpose of trust
participating in these schemes, people could lose up to 70% of their
pension after tax and charges, Ms Maunsell warned.
Inland Revenue rules you can not take your pension until you are at least
50 years old.
is also payable on pension benefits - and drawing down such a lump sum
could make people liable for higher rate tax at 40%.
addition, only 25% can be taken as a lump sum on retirement. There are
also issues over the fees that the schemes have been charging.
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