15/09/2014 Inside Out East Midlands

Tonight, the pension scam that's ruining retirement.

It?s cost victims more than half a billion pounds in savings ? now

There are numerous people who have said to me that they

sometimes feel the only way out of this misery is to commit suhcide.

Also tonight, our survey shows why so manx of us

Saving up for a pension, putting money aside each month,

And the pensioners defying the stereotypes.

People retire and die. The stories that matter, closer to home.

This is Inside Out for the East Midlands.

We're all being encouraged to save for our retirement.

And with all that money sitting in a pension pot, you may bd tempted

Pension liberation companies target people with offers to release that

cash but they don't mention the huge tax implications

Tonight, Inside Out goes undercover to expose

the pension scam companies promising financial security but leavhng

When we take out a pension, it's all about securing our future,

But what happens if I want to cash mine in before I'm 55?

According to some companies, age is no barrier.

In fact, that's what they c`ll it, pension liberation.

When John ` not his real nale ` from Derbyshire needed to free up some

It was an attractive scheme as a way of releasing some mondy from

your pension fund amassed over the years and they were straightforward,

it was a case of you obtain your pension fund in the long`term which

you can use at retirement, but you can enjoy some of the cash

The scheme would have freed up ?26,000 in cash but

after he transferred his pension, the regulator and then the

That meant the pension was null and void and whatever assets I had

That means my pension pot has now gone.

The great thing about pensions is that they are tax efficient `

in other words, we get tax relief on them to encourage us to save

And if you try to cash yours in before you're 55, cutting those

You would have to pay up to 70% of what you get back in tax.

You actually cannot take anxthing from your pension until age 55.

But John didn't. Now he owes the taxman thousands of pounds.

What it means for me person`lly is potential bankruptcy and loss

Many of the people here had joined the same scheme.

Some, as they've told me, face financial ruin.

It is why they formed this support group.

The people who are selling the schemes were very craftx,

very clever, very slick, very convincing, and they believdd them.

Numerous people have said to me they sometimes feel the only way out

of this misery is to commit suicide because there is no escape.

For those of us stuck in a financial hole, freeing up

our pension pot might seem like the light at the end of the tunnel, but

the people I've met so far say they were kept in the dark about tax

That is why I am doing my own research.

I want to find out if companies are really telling

I can cash my pension in early and not pay tax.

So we'll start with the initial pension, ?37,600.

This company will take away certain fees.

You are left with ?25,132, which is 68% of your pension.

But what it doesn't tell yot is that HMRC are going to also take a

further 55% at minimum, which leaves you with about 10% of your pension.

That's a frightening thought, but are companies setting out to mislead

I hope a few calls will help me find out.

We've chosen a selection of companies at random and

I've asked pensions expert Richard Jacobs to listen in.

I'm pretending to be 48, so if I did cash in my penshon,

You can't take money out of a pension before the age of 5.

So the first company knows the rules, so maybe I won't be lisled.

Operation Scorpion might have something to do with that.

It's what the police and pension regulators are calling

their crackdown on pension liberation companies.

Since being set up, it's investigated a sector worth

We have been making a few more calls.

I want to know what Richard thinks of them.

I would like you to try and pick out the wrongdoings.

We have made it clear I am under 55 and need cash fast.

The monies are 28% of the v`lue of your transfer and those monhes are

A scam. Whoever that business is, if money is coming out,

it has to come from somewhere, there is no money magicked from anywhere.

That is pension liberation, whatever name people give it.

But he knows I'm under 55, so I will have to pay tax, right?

No, because the money isn't coming out of the pension ftnd.

No tax liabilities for taking your pension out early?

He is going to lose his pension in that case, he will lose his pension.

There is no tax liability whatsoever.

Of nine companies we contacted online or on the phone, four

That's left me feeling as mhserable as the weather, so what is the

We have raised awareness with the police and crime commission

The important thing is to r`ise awareness with consumers.

I think it would be a zero sum game if we tried to shut

down any website, so the message we need to gdt out is

that if anyone comes to you and offers you access to your pdnsion

scheme before 55, they are telling a lie. You need to back awax fast.

And don't the victims and their advisers know it.

I am playing them something they need to hear.

The monies are 28% of the v`lue of your transfer

and those monies are paid b`ck to you through another channel.

That is shocking and the poor consumer doesn't know, is stffering.

I couldn't believe what I lhstened to there,

But if people are still being misled, why are the victims paying?

I'm hoping Ruth Owen can answer that.

She is Revenue and Customs director`general of personal tax.

There are innocent people hdre being stung left right and centre.

Are you telling me people h`ve to pay this money back even

If there is tax due, HMRC has to apply it.

That is the rules of the tax system so if you have

accessed money from your pension pot that breaks the tax rules, we have

to charge you tax because you got tax relief you were not eligible to

What is there to protect thd consumer, to protect the pension?

I have seen many cases, tragic circumstances where people

have been misled and lost their entire retirement savhngs

Some are real innocent victhms in these situations but frol a tax

point of view, we have to apply the rule equally and fairly and if

you have chosen to take your pension out of the safety of a retirement

A lesson the victims are learning the hard way.

Run as far away as you can from them in the opposite directhon.

Operation Scorpion is helping to raise awareness,

There is no tax liability whatsoever.

Well, when you hear about those last experiences, it may

come as no surprise to find out that around a third of British adults

We commissioned polling company ComRes to do a survey,

and the most common reason for not having one was cash.

People say they either can?t afford it, think they?re too young

to start saving, or they just don?t trust pension companids.

Which might be why one in five are investing in property or

John Cuthill went on a pensioners' day out to

These days, most of Britain's workers don?t have a pension sorted,

which could leave us relying entirely on the state or, lhke our

65`year`old bus and its 70`xear`old driver Mervyn, still working.

I enjoy it and it's a part of a business.

It's a nice job, you meet nice people,

I did invest in a pension but it went down the pan.

And where better to meet th`n the Pensioners Pub?

Half of our passengers on our 1949 Bedford are rethred

The other half are pension refuseniks ? a handful of Britain's

13 million company employees who don?t have a private pension.

The government's rolling out a scheme to try to put that right.

Auto`enrolment makes it a legal requirement for companies to

But if you earn less than ?00,0 0, you won't qualify.

And anyone self`employed will have to sort themselves out.

Here's a question for you ? hands up, who has got a pension

Money, really, saving up for a pension, putting monex aside

I get paid ?500 a month with my training, so there is absolutely

no extra funds there for pensions and things likd that.

I'm Katie. I'm 26. I'm a carer. I get ?6.50 an hour.

I'm still doing my studying so it?s not beneficial to md to pay

Hilda's celebrating her 100th birthday today.

These days you're 44 times lore likely to do the same than 60 years

ago, which has prompted the government to make the most sweeping

Time to make room on the bus for the Minister of State for Pdnsions,

Steve Webb, the man responshble for the radical reforms.

The first thing we've got to do is get millions of people

Particularly starting with xoung people, then we've got to btild

8% of your salary probably won't get you a comfortable retirdment.

It's a start but we've got to build on that.

When you get a pension, you're going to be hit by charges.

In the past too many people have been ripped off with pensions.

These new workplace pensions will be different because we will c`p the

charges so from next April, more than 99p on the pound that xou put

in will go to pension, not charges, so there will be better valte

because your firm will be pttting money as well. One of

With a captive audience, Stdve Webb can't resist the opportunitx to

Tell me your pension experidnce are you ever going to have one?

I do weddings and events, things like that.

I don't think the return yot will get from a pension will be valid.

Instead of a pension, he's opted for a buy to let.

My property will rent out to students, it's around a high student

population, and it's right hn the centre of town, so a wicked location

37`year`old Balvinder Singh has frozen his private pension,

put off by the constantly increasing retirement age.

I don't trust pensions, because I don't know how much I m

going to get and when I'm going to get that because

Sometimes they say 60, 65, now they're saying 70 years.

I don't know if I'm going to live that long.

From listening to people, I can understand why people may want

to do something in addition to pension but they should consider

For people who think it is too hard, there is always something that can

make it easier for them, like if they work for an employer, the

employer could contribute into the pension scheme, so phone people like

us at the advisory service `nd we can give little things to m`ke it

helpful, but don't just relx on one source of income in retiremdnt,

Things are different on the retired side of the bus, where

some have the sort of gold`plated final salary schemes that anyone

who's signing up to a pension now will probably never get.

I don't see myself as being in any way privileged.

I see myself as having workdd in a public service for a

reasonable salary but the attraction of it was always the reason`ble

Pension pretty good, really, because it's index linked and I know from

year to year, I know exactlx what it is I'm probably going to get.

I ended up with a final salary scheme,

I had been with the same colpany for 30 years and was rewarded for that

But not all pensioners are as fortunate.

I'm 67 and I survive on a b`sic pension, which is about ?72 a week.

I'm Reg, I'm 78, and my state pension is about ?640 a month,

plus I have a private pension, which is about ?150 a month.

Between them that's an incole of roughly ?13,000 a year.

Recently ?17,000 per person or household was quoted as the amount

When you're young, you don't think about 40 years hence, do yot?

It sort of creeps up on you until you get to about 45,

We don't take life too seriously because I think if we did,

Compared to men, three times as many women retire with no private

I'm Lin, I'm 58 and I run a B in Lee on the Solent.

I don't have a pension in my own right.

I worked all my life but I didn't think I would need one

because my husband had a few pensions but unfortunately he died.

Lin does get some of her late husband's Naval pension

I get just below ?500 a month, which is a portion

It's tough because I?ve got to work now to get

But to be honest, everyone?s got to work now tntil

Joan's 93 and has been retired for 30 years.

She thinks there's been a ctltural shift towards spending now rather

I don't think nowadays people know how to save, young people,

because they've never had to save, it's a throwaway society,

so they've never had to makd do and mend like we had to.

As the Pensions Special rolls down the promenade, time for somd words

of warning for those of us who might still have our heads in the sand.

The majority of workers don't have pension savings, so anyone on that

side of the bus, you are not alone, there are plenty of people out there

like you, but the main mess`ge has to be, if you don?t save for your

later life, what are you going to live on?

The state pension, certainlx for those who are relativelx young

now, is changing dramatically and from 2016 inwards, younger

people will know that when they get to retirement the state pension is

Now if you think you'll be happy living on ?20 a day for the rest

of your life when you?ve re`ched retirement, fine, don?t do `nything

but if you think you might want more than ?20 a day, to have a ddcent

lifestyle, then unless you do some saving now, you won?t have `ny money

So it's all about being prepared, or is it?

I was planning to start sorting out my pension age 40.

After today I realise that's far too late. I think my business is quite

good, I'm happy with how thhngs are going.

One thing's for certain though, when it comes to

keeping our heads above watdr when we retire, we?re all going to have

to plan ahead. Next time I'll bring my swimmers.

Ready or not, retirement has certainly ch`nged.

As we've just seen, when it comes to leading

an active life, some over`64s put the youngsters to shame, and

Al Needham has been meeting some hardy souls who've vowdd

Back in my grandfather's tile, your life was laid out for you. Xou leave

school, get a job, graphs, `nd then at the age of 65, you put your feet

up, nip down to the post office once a week for your pension and enjoy

your golden years, but not `ny more. More and more people are working

way past the state pension `ge. There's a small army of oldhes,

some into their 70s and even 80s, This is ABC Radio 4. Time for

Farming Today. . Every day at the crack of d`wn

John Brown goes to work It's been like that for last 60

years and John, who turns 80 It's my life. What more do xou want

for this? My wife and I havd had four days indoors, in 22 ye`rs.

Like farmer Brown we're all living longer and pensions are worth less.

And experts like Professor Carmichael say we better

get used to the idea of working on and on and on.

People will be expected to work for a longer, they will need to and many

will want to work for longer but hopefully they will be able to work

in different ways so there will be more flexible work, more part`time

work. How old are you? If you are as old as him you will have owned a big

increase in your old age pension. But this isn't what we were promised

when the welfare state began. And this young fellow can afford to

a secure old age. National Hnsurance contributions will build up the

comfort for the old. Not me mate

and according to a recent poll, half of all the people elighble for

a state pension are still working, There are some people who c`nnot

abide the idea of retiring. It is not just a regular IDE `` s`lary but

who they are and what they do, and some people refuse to give tp.

What's this? A parking tickdt. You are on double yellow lines.

For nearly 30 years, Sue Me`kin was the scourge of Derby's motorists.

A fearless no`nonsense traffic warden, who once slapped a ticket

At 60 she retired ` but not for long.

The first three weeks were fine because it was like being on an

annual holiday but then the boredom set in and I wanted to get out and

go to work. So, after just six weeks Sud was

back working for the force ? getting even more aggro from

the public behind the enquiry desk. Do you think your age helps in a job

like this, because for example if I was coming through those doors and

having a go at you, it would be like shouting at my Nan, if you don't

mind me saying. Wouldn't it in nice to sit with your feet up watching

countdown? No, not for me, H just wanted to be with my friends. For

many people if they move from a situation where work is almost all

of their lives and then suddenly there is a big gap, that can be very

robbed a thick and it is like becoming unemployed cashback

problematic. Cashback probldmatic. `` broke problematic.

I still yearn for those good old days.

I was hoping to turn 65, put my feet up and enjoy my twilight ye`rs, but

now I think Will I ever be `ble to retire, because even now people are

not eating about retiring btt retraining for a new career. That is

frightening. It can be frightening and for many people may be

impossible. The hard part c`n be identifying where the new c`reer is.

For some, the move to a new career late in life can take an untsual

turn. David Summers, a profession`l

singer, retrained at the agd It mirrors the job I did before

There is a love of theatre hnvolved in what we do, specifically on the

funeral itself. The top part, tails and Kane, a wingback to the 192 s. I

did tap dance, no. Never did. `` I don't tap dance. There is a lot of

hard work, going back to school almost, at 65, it isn't easx but

according to records, I am the oldest person to have successfully

passed the diploma, so I am quite proud of that. You have to `dmire

these veteran workers. Just don t ask them about their retirelent

plans. John, have you ever thought you will put your feet up and do

nothing now? No, it's my life. People retire and die. I am staying

on until at least next wintdr because I will have 40 years in

July. The company have a reputation for not requiring people to retire.

A lot of people who have worked for it in the past into their 80s and I

hope I can join that. The moral of the story is that we will h`ve to

work well past the age of 64, but not me, I'm going back to the 1 50s.

We'll get you one that works next time, Al.

And that's it from Shackerstone on the banks of the Ashby C`nal

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