New pension freedoms bring new pension dangers

Video: Simon Read talks to Alan Higham of Fidelity Worldwide Investment

The FCA has outlined plans to introduce additional protection for those accessing their defined contribution pension pot – a so-called second-line of defence for consumers (Getty)

New rules coming into force in April mean new pension freedoms, but they bring with them new pension dangers, warns a pension expert.

“With the new freedoms will come an army of people looking to take advantage of them and steal your money,” points out Alan Higham of Fidelity Worldwide Investment.

Some five million people will be targeted by crooks, he predicts. They are those aged 55 or over who have yet to touch their pension pots. The new freedoms will allow them to do what they want with their retirement savings from 6 April.

How will the fraudsters approach people? “You’ll been getting text messages, cold calls or emails offering, maybe, a pension review,” Alan explains. “It’s very cheap for a company to send many thousands of texts or cold calls and they only need to get one or two victims to make it worthwhile.”

In fact the Information Commissioner's Office has already been forced to take action against one firm. It warned the Swansea-based call centre Help Direct UK to stop sending spam texts asking people if they want a review of their pension after it sent 187,960 spam texts in nine months.

“Ignore spam texts or cold calls and go to the government’s Pension Wise service which is being offered by the Pensions Advisory Service and Citizens Advice,” Alan suggests. “Or talk to one of the established pension companies. They won’t be impartial, but they are regulated and will have a lot of expertise that can help you when making a decision.”

There’s more advice in the video and Alan Higham also explains how you can avoid losing a lot of your pension cash to the tax authorities with a little bit of planning.