Submitted by SWFBU on
2 October 2012
TO: ALL MEMBERS
Dear Brother/Sister
PENSION LIBERATION SCHEMES – WARNING TO MEMBERS
It has been brought to the Union’s attention that some members have been approached by companies offering access to ‘Pension Liberation Schemes’.
These schemes that are also sometimes known as 'pension unlocking' or 'pension loans', describe a process whereby pension scheme members are offered a chance to release their pension funds before retirement in exchange for converting them partly or entirely into cash.
This may sound very attractive to people who want to access their fund especially in light of the current situation surrounding pension proposals as well as the hardships created by the state of the economy. However members need to be aware that when something sounds too good to be true it usually is.
Scheme members should be wary of these approaches which are offering immediate cash sums following a transfer. This release of benefits as an immediate cash sum usually has a considerable ‘management fee’ deducted and is likely to have various implications for the member concerned and for scheme administrators relating to charges imposed by HMRC in relation to ‘unauthorised payments’.
The Union will be raising this issue at the upcoming Firefighters’ Pension Committee and will be making further enquiries on this issue, including taking legal advice if necessary.
In the meantime it is extremely important that members ensure that they take appropriate financial advice before considering any options such as these and should make themselves fully aware of the potential pitfalls associated with these schemes.
These schemes appear to be new within the Fire Service and we shall research the issue further so as to ensure that members have the best possible advice available when making decisions on such matters. Further information will therefore follow when available.
Best wishes.
Yours fraternally
MATT WRACK
GENERAL SECRETARY
