On the go: Anxious savers are trying to cash in their pensions more than 20 years before they are allowed to do so, as they fall victim to online scammers exploiting financial distress amid the coronavirus pandemic.
The number of people looking to withdraw their pensions before the minimum age of 55 has soared more than sixfold to 31 in March from just five last December, according to online pension provider PensionBee.
It said the median age of people seeking early access to their retirement savings in March was 35, with one customer as young as 32 asking if she could turn to her pension pot after being made redundant while several months pregnant.
Savers and retirees have long been targeted by fraudsters, as rogue advisers looked to exploit pension freedoms, introduced in 2015, that allowed members to trade in their savings for a cash lump sum.
But scams have proliferated this year, with a 400 per cent increase in Covid-19-related fraud already reported by the City of London Police within the space of a month.
Vulnerable people are now even being targeted with paid adverts on Google, with a quick search of ‘early pension release under 55’ returning a number of sites offering to help individuals cash in their pension at any age. Google was approached but did not immediately respond to a request for comment.
“Pension schemes are popular in normal times,” said James Walsh, a partner at law firm Fieldfisher. “Everyone is worried about how their pension is performing, so it’s probably rife at the moment with people trying to get access to pension funds.”
With “a huge increase in phishing” attacks, pension schemes could be doing a lot more to educate their members, he added.
HM Revenue & Customs can tax up to 55 per cent on withdrawals before the age of 55, while cashing in a pension early is usually only permitted if an individual is expected to live less than a year because of serious illness.
“Covid-19 has put us all in uncharted territory,” said Clare Reilly, head of corporate development at PensionBee.
“While it might seem an attractive decision when times are tough, we urge consumers to exercise extreme caution when considering online financial advice around early pension release.”
