Trade unions have urged workers to avoid pension unlocking firms, which loan money secured against a pension or transfer pension cash into a high risk investment.
Brendan Barber, below, the head of the Trades Union Congress, has branded the firms "sharks" and urged people to be cautious. "With real wages falling and finances stretched it's understandable people might be tempted to trade their pension for short-term cash," Mr Barber said. "But anyone under the age of 55 who transfers their pension into a loan could end up a big loser. Our best advice is to avoid doing so."
The TUC's call followed an unprecedented warning issued by the Pensions Regulator, the Financial Services Authority and HM Revenue & Customs. "If the offer sounds too good to be true, it probably is. It may simply be a scam designed to get hold of your money. Transferring your pension to one of these questionable investment models could result in you losing your entire pension," warned Victoria Holmes of the Pensions Regulator.
HMRC added that such schemes could soon be the subject of a tax investigation: "We are committed to ensuring the rules around the age from which pension fund benefits can be taken are protected and that savings built up with the benefit of tax reliefs are not misused. We will take action to detect and pursue those who break the rules," said Graeme Hood.