Pension advisers have welcomed new plans which will ban excessive charges for people taking part of their retirement income early.
But Emily Jacobs, Director of Newcastle-under-Lyme based Richard Jacobs Pension and Trustee Services, is warning savers to be on guard against a rising tide of pension scams.
The Financial Conduct Authority (FCA) has published plans to limit exit charges to a maximum one per cent of the value of a pension pot.
This should save beneficiaries hundreds of pounds with up to two million UK savers being protected against excessive fees as high as 40 per cent.
The proposals have been welcomed by Emily Jacobs, who said: “There is no doubt that fees were impeding the ability of people to take advantage of the recently introduced pension freedoms.
“The FCA has now said that penalties for existing savers with older pension plans should be capped at one per cent of the pension pot’s value. There will be no exit fees at all for new pensions.”
Changes announced by the Government in 2014 allowed anyone over-55 to withdraw all or some of their pension pot.
“There is no doubt that more people are taking advantage of the pension freedoms but, in our experience, savers are continuing to behave sensibly and are taking modest amounts for projects such as home improvements,” said Emily of Richard Jacobs Pensions, which is based at Lymedale Business Park, Newcastle-under-Lyme.
“Inevitably the new freedoms have also led to a rise in scams. Typically these involve persuasion to move money from a genuine scheme to one which claims to allow people under the age of 55 to release money.
“Such schemes put people at a risk of incurring tax penalties of up to 55 per cent, leaving them with little money to support their retirement.”
“Scams are constantly evolving and people should be vigilant. Help and advice is available from reputable companies and people should also remember the old adage, if it looks too good to be true then it probably is.”