It has recently been highlighted by the pensions regulator that there are risks associated with what are being called pension liberation programmes. They often have the problem of leaving those who invested in a pension significantly out of pocket. It is tempting for people to take money from their pension before they reach 55 but it is very important that they do not as the firms which run these sort of liberation schemes do not have proper authorisation.
Many of the firms that offer these services are based overseas which means that those who take advantage of them will not be entitled to any compensation and the companies often can never be found if things go wrong.
The representative of these shady companies often make telephone calls to homeowners to see if they would be interested in getting money out of their pension before they retire. If this is something that someone is considering they should do a great deal of research before even considering it.
The companies behind this practice say that they can release some of the funds if the pension is transferred to their company. This has two additional significant disadvantages, for one, the money given back to the investor is subject to tax and the firm doing this sort of practice is going to take a substantial fee from the customer’s account.
Those who draw money from their pension may run into the problem that they do not have any funds when they retire. Additionally, these companies might make poor investments which can damage the pensions value.