Two separate pieces of news came the way of PN the other day.  The two separate pieces of news may have been linked but, so far as PN can and could make out, nobody had actually bothered to do the linking so; let PN be the one.

The pieces of news in question are that the pensions industry (to the extent that the selling, administration and management of pensions can be called an “industry”) has echoed a statement made by Mr George Osborne.  The statement is that an estimated £1bn has been withdrawn from pension schemes and arrangements by members taking advantage of the new so-called pension freedoms. 

The second, separate announcement PN read was that there has been an increase in the number of reported cases of pension liberation fraud.  Are the two connected?  Perhaps the two pieces of news aren’t connected but it seemed to PN that the two pieces of information and the fact that they came out at virtually the same time was more than a coincidence.  Coincidences are rare in pensions just as they are pretty rare in a number of areas of business and commerce.  It isn’t a coincidence (for instance) that pension’s law has or seems to have more than its fair share of intellectual anoraks.  It seems hardly a coincidence that the marked increase in transfer fees paid in round ball football by (for instance) clubs in the English Premier League happened and has roughly kept pace with the marked increase in funding provided to teams participating in that league by (for instance) television companies.  It may be but probably isn’t a coincidence that, since the digital age has got going in the developed, Western world, there has been an increase amongst its citizens in the demand for glasses and contact lenses.  PN could go on but probably shouldn’t.

Withdrawing money from pension schemes

The Chancellor of the Exchequer, Mr George Osborne, made a statement on 17 June.  His statement, made with what seemed to be outright glee, was that 60,000 pensioners have withdrawn a total of £1bn from their pension accounts (or “pension pots” as Mr Osborne, clearly a supporter of the British porcelain industry, called them).  Whereas Mr Osborne appeared quite pleased at this news (possibly thinking of the revenue the withdrawals generated for HMRC), certain other experts gave a less enthusiastic welcome to this news.  Two men; one who was called Tom McPhail and another who wasn’t, made the point that pension “freedom” means “freedom to get things wrong” (this was what the man who wasn’t called Tom McPhail said).  Mr McPhail, who had probably emerged from taking his children (Dale and Gayle) to a seminar on organic husbandry, made the observation that “whilst the number of people taking money from their pensions has not significantly increased, the way they are doing so has [changed]”.  

Pension liberation

PN read Mr McPhail’s piquant observation with feigned interest and turned to the other piece of news (mentioned above).  The other piece of news is that the Office for National Statistics has published figures compiled by Action Fraud. Those figures indicate that cases of pension liberation fraud (these are out-and-out scams if you’re still reading) increased 5% last year. The number of cases of pension liberation fraud between January and December 2014 was 758.  Readers of PN will recall that pension liberation fraud involves a person with a pension (even though this person is likely to be under 50, let’s call him or her a pensioner) being contacted by someone else who wants the pensioner’s pension for him or herself.  The someone else, i.e. the fraudster, explains to the pensioner that the pensioner can get his or her hands on his or her pension by trusting it to the fraudster.  The fraudster has set up a pension scheme especially for pensioner’s pension and has registered it in his second best friend’s front room.  The pension scheme’s sponsoring employer has been set up specially too; its registered office is a P.O. Box in a newsagent’s shop in Bolton or Bolton-le-Sands or Bolton Abbey.  

This particular piece of news caused PN to think more about scams, the perpetrators of scams and their victims.  Recalling a piece written some time ago by Mr Clive James, PN remembered that what he likes least about fraudsters (and in particular the perpetrators of pension liberation fraud) is their belief that they have a right to the hard-earned cash of other people.  This belief seems to be rooted in the belief that the “other people” are too obtuse to be left unpunished for their gullibility or because doing a lot of work in order to separate a pensioner from his or her savings constitutes hard work which is then worthy of some reward or other.  It is quite possible that we might think of (some or most) pension liberation fraud victims in this way too.  After all; how could a person be taken in by a man in a mac offering a return of 25% plus a lot of cash if only the victim will let man-in-mac “unlock” his or her pension so that half can be paid out in cash (before tax) with the other half being invested in man-in-mac’s split conversion, double- downdraft fiscal disappearance scheme?  Well; PN supposes there may be something in that however PN also supposes that we would be less likely to think that way if we happened to be one of the victims.  We might wish violence on the fraudster or we may campaign to get Action Fraud to do more to prevent the pension liberation scams than put a small picture of a scorpion on its literature (which is what it does).  We might also make the connection between (a) the complex legislation and guidance which seeks to permit a person to “get his hands on his pension” (rather than buy an annuity) and (b) the fact that there seem to be more individuals thinking of ways of unlocking our pensions for us and then keeping us from some or all of the unlocked pension.

As PN writes this paragraph, his computer is working perfectly (PN is sitting in his house by the way) however a man has called him to assure him (vis. PN) that his computer is being or has been attacked by a virus and that he (i.e. the man) is ready to call and fix it.  PN would like to meet the man at the door, let him in and then chop off his hands.  PN will not, of course, do this because PN belongs to a culture that has got beyond retributive tantrums.  PN belongs to that culture even if the man on the telephone doesn’t.  So; PN will just shoot him.

And finally………

Some good news (or at least not bad news) for those who ask for it – that would be anybody with a name like or exactly the same as you; the reader.  If you’re (still) reading, this is for you.

Early this week, HM Treasury confirmed that inherited (money purchase / defined contribution) pension accounts will not be subject to inheritance tax.  This is not quite what the legislation indicates at the moment.  Applicable legislation actually provided that “drawdown fundswill become part of a member’s estate whereas, what it meant to state was that “drawdown funds will NOT become part of a member’s estate”.  This small but significant error was spotted by a very bright, albeit quiet and unassuming pension lawyer.  This lawyer informed HM Treasury that it might want to check its original wording.  HM Treasury did so and has now made it known to the un-put-down-able magazines which PN never puts down (vis. Pensions Age and the nearly Nobel Prize winning Professional Pensions) that it will issue guidance “shortly” to clarify the matter.

Of course, for the above to be good news, one would need to have a money purchase pension to leave behind but let’s not end the edition by being picky.

Until next time….