The New Pension Scam and How To Avoid It

It’s a sad fact that those of us that have saved up to support ourselves in retirement by saving for a pension is often the target of scammers, both at home and abroad.
Of course, the authorities have been trying to fight the number of pension scams for some time, which only gets harder to do as the scams evolve.
One of the best ways to protect yourself against scam and mis-sold pensions is to learn a little bit about how to spot them.
So, here’s how a Third Generation pension Scam works, and how you can avoid it.

Old Vs New Pension Scams

As more people become aware of pension scams and how they operate, some scammers have upped their game.
Just a few years ago, people were receiving cold-calls and being told to transfer into SIPP pensions, investing in high-risk stuff like overseas property schemes and forestry projects, without being fully informed about the risks involved. This often resulted in people losing huge chunks of their pension, especially in circumstances where they were unable to make a claim.
But both the FCA and many pension savers got wise to this, forcing the scammers to change the rules of the game yet again.
So some began disguising the high-risk investments in bonds.
pension scam cheating

High Risk Investments In Disguise

Much of the scamming model has remained the same – it usually starts with a cold-call to the intended target, and it may involve a “free pension review”.
From then, SIPP pensions (as well as SSASs and QROPSs) are often still the destinations – more flexible pensions that can often hold high-risk investments.
But here’s the difference: instead of directly offering more obviously risky investment in something like overseas property, the investment is ‘wrapped’ in a bond, with a friendly sounding name that doesn’t hint at the high-risk nature of the investment lurking underneath – an extra layer of disguise.


Let’s use an analogy to explain suitability and how negligent or even “scammer” financial advisers sometimes work.
Let’s say you want a chocolate bar, but you have a nut allergy.
Of course, you wouldn’t want a chocolate bar with peanuts in – it would be unsuitable for you. But the guy selling the chocolate bars is overstocked with peanut flavoured bars, or maybe makes a bigger profit if he sells those bars rather than plain chocolate.
So, he cleverly takes a chocolate bar with nuts in and wraps it up in a plain chocolate wrapper, so you make the purchase. What happens later? Well, it could cause you damage, and make you feel like you’ve been had, but by that time, our chocolate bar seller has disappeared off into the night…
Well, that’s sort of like disguising a high-risk investment so people who aren’t suitable would unwittingly push their money into it.

How to avoid a pension scam.

  • Information is power – get to know your pension arrangements, including where your money is invested and how it is supposed to pay a return. Be on the lookout for any investments that aren’t regulated by the FCA, or are based abroad – they may be higher risk than you thought.
  • Avoid cold-calls: we hope these will become less now that tougher data protection laws have come into effect, however scammers will still try to find a way to contact you. Free Pension Reviews can sound good, but they will often be far from unbiased as they look for places to put your pension that pay them the commission.
  • Find a reputable and regulated financial adviser – Always seek independent financial advice, and check your adviser out using the FCA register (free to use).
  • The Golden Rule: If it sounds too good to be true… you know the rest. Keep your head screwed on, and be on alert for high-pressure tactics like playing down your old pension, posing the new arrangement as a limited time only offer, and anything aggressive or biased.

Keep your retirement plans safe, and if you get into trouble, don’t take it lying down.
Tom Iveson is the Content Manager for Get Claims Advice where he covers topics related to SIPPs and mis-sold pensions

How to Choose Between SIPP and Stakeholder Pension Plans

Pensions are becoming an ever more important topic, even among people at the start of their working lives. With fears that some of us are not putting enough money aside for future retirement, it would seem the best option is to invest for as long as you can, and to make sure that this investment is the best plan for you.
However, the world of pensions can seem a little murky to the uninitiated, and with the huge amount of claims related to people who feel they have been sold the wrong type of pension for them by financial advisors, it’s a good idea to know the key differences before you start discussing your options.
retirement plan
Before deciding on a specific plan, you need to establish whether you want a Self-Invested Personal Pension (SIPP), or a stakeholder pension.

Who is a Stakeholder Pension Right For?

Stakeholder pensions are aimed at people with lower incomes and people with unpredictable earnings or working patterns (for example people who want to take periods of time off work for things like studying, travelling or having children) or who may not want to commit to investing a high amount every month.
There is a cap on how much you can invest of £40,000 per year (this reduces to only £3,600 if you don’t pay tax), but you can start with as little as £20 per month and won’t be penalised for breaks in contributions. Stakeholder pensions have low charges, and can be relatively simple to manage, also making them a good option for people who just want to pay into their fund.

Who is a SIPP Suitable For?

SIPPs are more flexible schemes where you actively manage where your money is invested. Also, you can get a wide range of options to choose from that includes shares, commodities and more. They tend to be favoured by high-income earners, however there are now plenty of low cost SIPPs which are designed to appeal to mid-range earners that want flexibility and are interested in managing their own fund.

Not Sure Where to Head?

If you still aren’t sure which plan is right for you, it could be worth speaking to a financial expert like Bestinvest,to assist you in your decision making. For instance, if you are a high earner but don’t want to manage your own portfolio, or you’re a middle-income person who is undecided, such firms can provide the help you need.
Remember though, whether you seek external support or sort this yourself, it’s important you research your options thoroughly before you make a choice.

A Short Guide to Saving for Retirement Across Your Adult Life

Retirement is something you need to start thinking about a long time in advance. It might seem like it’s far away, but it will creep up on you sooner than you think. If you aren’t prepared, you could run into financial trouble when it’s time to stop working. Or, worse, you won’t be able to give up your job at all. Everyone dreams of a retirement in the sun when they won’t have to lift a finger if they don’t want to. If you wish to make that fantasy a reality, you have to start managing your money well now. Here are some things you should do to get ready, no matter how old you are.


At the beginning of your twenties, you might have been working full-time for a few years already. On the other hand, you may have just completed a college degree and are either entering your first full-time job or going to graduate school. Maybe you’re saddled with a lot of student debt and perhaps even having a family already. You’re unlikely to be earning a lot, but you can still make plans to put aside some money. Open a savings account and budget your salary so you can put away some cash at the end of each month. It might not be time to start investing just yet, but if you can afford it, you can begin to dabble.


By your thirties, your career is in full swing and you’re likely to have a family. How much you’re able to save and invest could depend on a lot of factors. Hopefully, you’re able to make smart decisions about your money. Now is a good time to invest in assets for a long-term investment. For example, you could buy gold or silver coins, like the famous Silver Eagle. You should also be addressing any debt you have and making sure you have a good plan to pay it off. This could be anything from student loans to your mortgage. Don’t forget to check that you’re taking advantage of your employer’s options for retirement.


In your forties, your kids may be starting to leave home. Although this can mean you have more money, you might also be contributing toward their college expenses. Hopefully, however, you have higher earnings and fewer expenses, so that you can put more away. Keep saving and exploring your investment options to grow your money. If you haven’t already, now could be a good time to invest in property. You can downsize once the kids have left home, and rent further properties.


Retirement is getting closer, and you’re probably hoping to stop working in the next decade or so. When you’re in your fifties, it’s a good idea not to take too many risks with your money. Try to go for safer options when choosing your investments. Check that every penny is going toward the best purpose, but remember to enjoy now instead of saving everything for the future.
Ensuring you’re ready for retirement is hard, but you can do your best to prepare. Start early and you’ll feel much better as the time approaches.

These 5 Money Habits Will Help You Retire Early

Retirement looms in the future like a golden promise — bright, desirable and rewarding. Maybe you hope to retire abroad, or just finally relax into the home you’ve had for years. However you won’t be able to retire into a blissful dream without doing the work now to create and save money to live off of then.

Check out these five habits that will help you design the dream you want to live.

Think Ahead

Saving for retirement is a long-term process. The sooner you get started, the easier it will be to accumulate wealth gradually. Instead of trying to rush into a last-minute get-rich-quick scheme, taking the time over 20 or 30 years to save will position you well to retire in style. Shifting even a few dollars from each pay check you earn in your younger years will help you create the nest egg you’ll need to retire early. Buy to let mortgages are similar to, but different in comparison to residential mortgages. Compare the rates on these with what you’d get on the most competitive home buyer mortgages on the market – the rates offered tend to be noticeably higher.


Make a budget and figure out what your monthly expenses are. You can use that information in two ways. First, you’ll be able to calculate a rough target sum to save. Multiply your monthly expenses by your target number of retirement years to find this figure. Second, you can use your budget to plan for how much money you’ll need to save now in order to retire later.

Incentivize While saving for retirement is a long-term goal, try setting more immediate financial goals, like paying back student or credit card debt. Not only will taking those actions put you in a better place moving forward, but you’ll train yourself to manage your money well when you enjoy the reward of meeting of your goal. In this way, you’ll use a basic tenet of learning psychology – operant conditioning – to change your own behaviour.

 Choose Wisely

To reduce your overall spending, try purchasing high-quality items that will last longer and wear out more slowly. Doing so will cut back on the number of times you have to buy the same item, which means more money in your pocket to put away for retirement. Any sort of money-saving habit you can establish early will help you contribute to your retirement fund, as long as you’re consciously making the choice to shift the extra dough over to your savings account.

Be Informed

Take the time to seek out retirement resources that will help you understand the realities of taking an early retirement. An abundance of information is available online to help you craft and continually update your financial plan.
Establishing these five money habits will lay the groundwork for you to enjoy the retirement you crave.

Things to Consider When Working Out What to Save for Your Retirement

Retirement is, in many ways, something most people look forward to. Without needing to go to work every day, you have time to travel, spend time with your family, and work on hobbies you may never get enough the time to enjoy whilst working. However, with all the doom and gloom in the media about how many people no longer have enough money put aside for retirement, if you are thinking about beginning to save for your own autumn years, you may wonder exactly how much you need to put away from your paycheck each month, or which of your current assets will help you when the time comes.

Saving for retirement is important, but often when working out a budget, people only take into account their normal living expenses, and maybe a little extra for things like nice vacations or good gifts for their grandchildren at Christmas. While this is a reasonable approach, it can often leave retirees shocked when something unexpected to them (but fairly normal for elderly people) occurs and they are faced with a large bill. Here are some things to consider when working out your retirement budget, which you may not have thought of before:

Home Modifications

It may be hard to imagine right now, but in the future, you or your spouse may have mobility issues as a result of normal aging problems. If you can no longer get up the stairs in your house, or can’t get in or out of the bath, for example, you may need to modify your home so that these things are possible again. Things like stairlifts or accessible baths are easy to get hold of and will take care of these problems, but the work required and the units themselves can be quite expensive. Having some room in your budget in case you need to do things like this will make sure your retirement is far less financially stressful, as you can adapt your home as the needs arise.

Retirement Housing

If you are working out your budget based on the current amount of rent you pay, or the fact that by then, you will have finished paying off your mortgage and housing should effectively be free, it may be worth thinking about what you might do if you can no longer live on your own, or if you want to move into housing specifically aimed at the elderly where there is care available and other people in your age range to socialise with. Saving money for comfortable retirement housing within your budget can alleviate these worries, and means you don’t have to sell your house if you were planning to pass that on as a legacy to your children or other loved ones.

While it may not be easy to imagine being unable to live as normal in your current home at this point in time, factoring in house modifications and the possibility of retirement housing with your budgeting plans can make your retirement far more comfortable.

Financial Preparations to Take Before You Retire

Retirement is a big step for anyone to take. After a lifetime of working every day for years, it can seem impossible to just stop all together and adjust to a life without your job. The biggest worry that most people have is how they will be able to afford their current lifestyle without having the income from their job that they have relied on for so long. This is an understandable concern and it is something to be addressed before you quit your job for good.

Many people make the mistake of thinking that social security and benefits from their 401K will be enough to allow them to pursue all the things they want to when they retire. The truth is that those incomes are often just enough for you to make ends meet. If you want to have financial security and the ability to spend money on activities you didn’t have time for when you are working, you will need to plan for more when you retire. Here are some financial preparations you should take before you retire.

Invest in alternative forms of income

There are some really great ways that you can keep earning valuable income after you stop working. One popular method that many people have found success with is investing in real estate. You can hire a company to manage the property for you, so you can get an income each month without doing any work. You can use TitleMax to get the extra money you need to invest in the right opportunity. Find a method that will work well for you in the future and invest now.

Set savings goals for yourself

If you want to have extra money for things like travel when you retire, you will need to plan accordingly. Set savings goals for yourself each month that will get you to the goal that you are working towards after retirement. Having this extra cash is not only a great emergency fund in case something unexpected happens, but it is also a great way to plan for the future you will have after retirement.

Determine what your new budget will be after you retire

Your budget will change a lot after you retire, and you should be prepared for those changes. Not only will be losing your income, but you also won’t have a lot of the expenses that come with working, like commuting costs and work clothes expenses. It is a good idea to think about all of these aspects and try to plan an exact budget for your life post-retirement. This way, you will know exactly how much you will need financially so you can prepare for it now.

Eliminate all debt

The best way to improve your financial standing in any stage of life is to reduce the amount of debt that you owe. When you retire, you will have less free cash to make debt payments, so eliminating that expense before you retire is essential. Find a way for you to pay off your debt before you retire to start fresh in your new life.

3 Old-Fashioned Retirement Rules to Discard

I am not much in love with rules of thumb when it comes to finance though their significance to the rank and files cannot be downplayed. From experience, I know everyone is not willing to research on the financial topics and they love to stick by easy-to-remember conventional rules. On the flipside, these guidelines are often not correct and outdated as well, keeping you away from fulfilling your financial goals.

When people think about saving for their after-retirement life, most of them get attracted to these conventional rules. Unfortunately, these are often claimed to be facts even though most of them are no longer applicable. Here are two obsolete finance rules as well as what you should follow instead:

$1 million will make your life comfortable

The first rule of thumb says $1 million is a nice sum to live on whereas the reality is it is no longer a big figure that it was used to be a decade ago. It cannot ensure a comfortable life for 20-25 years, particularly if you live in a posh area and enjoys a high living style.

Though it is not a hefty amount anymore, it is still a dream figure for many Americans. In fact, less than 5% of total Americans earn $1 million in their lifetime. For many, it’s so frustrating to accumulate the amount that they will give up the idea of saving at all.

What you should do: Make it a target to save eight times of your final salary. There is no easy-to-remember figure; rather things are more personalized to make the goal achievable for any worker irrespective of his/her salary slab.

Replace 80% of your last salary after retirement

It’s not an out-of-date advice. However, it’s too much generalized and you can hardly figure out how much to save for sunset phase of your life. How much you will need in your post-retirement life depends on activities during that time. If you want to travel around the world, you must have more nest eggs. If you experience frequent or serious health problems, more retirement income will be needed than what you would if you stay fit and fine just like what you used to be in your heydays.

What you should do: Figure out how much you need, depending on your present lifestyle. The conventional rule does not consider several variables in a retiree’s life, including cost of living, health issues, leisure activities etc. Take time to question yourself about what you want to do after retiring from service and how much you need to support your lifestyle.

What to Do if You Reached the Retirement Age?

All adult people work day by day, earn their income to spend it on basic needs and different luxuries of life but inevitably there comes a point when they are not able to work anymore. Under the law once you turn 65 you have a chance to retire and to get pension from the government. But there are many strong elderly persons who still feel like working and consider numerous advantages of staying at a working place.

Here are some points highlighting the particular features of retirement which will help you to take a decision if to do it or not. Of course the issue depends on life circumstances of each individual but here are some common points which could be considered by everyone.

1. Fist what you need to think about when going to retire is that your income source will significantly decline. You will become dependent on governmental maintenance and in any case of money shortage you will have to spend the money which you saved as a retirement fund. But you also need to remember that money should be turned back with a certain amount of interest. Of course if you have a family able to help you with any cash issues there is nothing to worry about.

2. Preparing to the retirement age financially is an important issue and you need to think about it from the young age. Note that the size of Social Security payments is near $1300 and it may increase not more than $2500 depending on your length of work. So if the term ‘fund for the retirement’ is not unfamiliar to you then you will have all conditions for comfortable life.

3. If you are 65 and still have a job which is not like pain in the throat, if you still have forces to perform your job in a good way then it is the best idea not to drop it. Working just few more years will not just bring you income but you will have a chance to get more money as soon as you are approved for Social Security payments. You will also have an opportunity to benefit with health insurance coverage which is provided by the employer. It is true that you will have to pay 100% of your health care after retirement.

4. What you need to think of is what you are going to do on your pension. Without the necessity to wake up early each morning and to spend most part of the day while performing your duties you will find much free time. Here is very important to think of what you are going to do, to create goals and a plan in order to avoid mental disorder. Or it may be better to stay for some time at work unless the issue is solved.

5. Many people are simply tired from work and from daily duties which are referred to it. Working for let’s say 30 years is a lot so an opportunity to have rest, to think of personal development issues or just to pay more time to your family may be worth retiring.

You may also counsel with your family members, spouse or financial advisor but remember that this is your life and you need to take pleasure of it. So ask yourself what you want and don’t hesitate doing it.

3 Strategies to Maximise your Retirement Income

Saving money for retirement doesn’t have to be a complicated process. While many day-to-day sacrifices are required in order to maximise savings, the benefits of building a healthy retirement fund surely outweigh the small indulgences that are sacrificed in everyday life. One dollar saved today can turn into a hundred dollars for tomorrow.

Maximise your Retirement Income
Maximise your Retirement Income


Depending on your location, an employer may be required to make a contribution to your retirement savings. If this is the case in your area, be sure to check with both government policies and your company to educate yourself on what you should expect. In some areas, employers aren’t required to contribute to your retirement, but will voluntarily match dollar per dollar. That is, if you contribute $6,000 to your retirement, they will contribute an additional $6,000 to your retirement within the same year.

In other areas, employers are required by law to contribute a portion of your salary – out of their pocket – to your retirement. For example, some areas require an employer to contribute up to 9% of your pre-tax income to your retirement. It may be beneficial to live or work in an area with such a rule, as it offers automatic retirement savings without additional effort on your behalf.


The final ten years prior to retirement are arguably the most crucial. Ramping up your savings by rerouting a rather generous portion of your income into a retirement fund or investment account is an aggressive, but often necessary financial choice. It is also a good idea to pay off the remaining balance on your mortgage in order to drastically slash your monthly expenses in retirement. Little else provides as much peace of mind as knowing that your home is paid that you’ll be safe in times of financial hardship.

If you haven’t saved very much for retirement, yet are soon approaching retirement age, it may be beneficial to seek additional part time employment and funnel the extra income into retirement savings. While this is an extreme measure, it is an effective method to drastically boost retirement savings within a short period of time.


Homeowners with substantial equity in their home may choose to sell large residences in favour of a smaller, more affordable property that can meet the needs of a single retiree or a retiring couple. Ideally, the proceeds of the sale will cover the full purchase of the smaller home, and the remaining funds will be transferred into retirement savings. However, trading in a large, expensive property in favour of a home with a more manageable mortgage can also be a smart move.

Business owners that aren’t ready to fully let go of their business can sell a majority share to an investor while remaining a silent partner. This option still allows for receiving monthly or quarterly profits from the business while remaining a vested partner.

Saving for retirement becomes far less of a chore when you are aware of the lifestyle you want and how much income it will take to maintain your desired way of life. Making use of the financial resources that are available to help you save for retirement, along with a firm mindset on pinching the dollars that can be squeezed can result in a sizable retirement savings. Planning and taking action are the two most important ingredients to success when saving for retirement.

The Future of Saving for Retirement

Saving for RetirementHow much should a worker save for retirement? The dollar amount can vary based upon standard of living. Regardless, current workers will likely have to face a much different climate than their parents and grandparents did.
In the post-World War II era, many, if not most major companies provided their employees with a company-paid pension plan. These pension plans were usually defined-benefit plans. These plans differed a great deal from much of what is offered to employees today.
Benefit Plans

Defined-benefit plans required the company to pay so much per hour that an employee worked into a pension fund, frequently handled by a labor union. These funds added up over time and were invested to earn interest. When the employee retired, they would then receive a monthly payment from the pension fund that supposedly would not differ. The amount that a worker can get from these defined-benefit plans (called defined-benefit because there is a guaranteed payout at retirement) is based upon their years of service and the amount that the company put in each year.
In addition to a guaranteed pension, workers for much of the twentieth century could count on payments from social security. The average social security payment for 2012 is about $1,200, and retired couples draw nearly $2,000 per month on average. While this may not seem like an extravagant income, when added with company pensions, retirees can at times live comfortably in certain parts of the country, especially when considering that there are expenses associated with working, such as transportation, lunches and clothing costs that can be greatly curtailed when a person does not have to go into an office every day.
Defined Contribution Plans
Defined-benefit plans are going the way of the dinosaurs, however. Today, rather than offering defined-benefit pension plans, employers are frequently turning to defined-contribution plans. These retirement plans are better known as 401k’s or 403b’s. There are a couple of major differences between the earlier defined-benefit plans and the current crop of 401k plans. First, defined-benefits promised to pay a retiree or their beneficiary a steady income for the rest of the retiree’s (or beneficiary’s) life. Secondly, employees were not generally expected to contribute to these accounts.
There is little likelihood that the older defined-benefit plans will return in the near future, if ever. Also, while the social security fund has enough to pay out its benefits for several years, there is the looming possibility that benefits will outpace contributions in the relatively near future. This gap, combined with the animosity that many politicians have for any social programs, requires that people entering the workforce today prepare for the distinct possibility that social security will go the way of the defined-benefit pension.
Therefore, it is imperative that current workers begin now preparing for their retirement, because it is quite possible that they will not be able to rely on their employer or the government for any funds. The 401k (or 403b for non-profit workers) is the leading avenue for retirement funding today. The maximum a person under 50 can contribute to their company’s 401k program is set at $17,000 for 2012. Older workers can contribute up to $22,500. 401k contributions are tax-deferred, which means that workers pay no taxes on their contributions until they are withdrawn, generally after age 59 1/2.
An employee can frequently increase their retirement contributions merely by contributing in the first place. Many companies will match employee contributions at a stated rate. For example, a company may offer to match an employee’s contribution up to 3% of their annual salary. By maxing out his or her contribution to the matching limit, the employee’s contribution, in effect, becomes 6% without having any additional money coming out of his or her paycheck. Not all companies match contributions, but it is worth at least contributing enough to get the full benefit of the match.
Individual Retirement Accounts

Another option that people have for planning their retirement income is the IRA, or Individual Retirement Account. There are two types of IRAs available to people investing in their retirement. The traditional IRA has a contribution limit of $5,000 per year for workers under 50 ($6,000 for those who are older) and any interest or capital gains are tax-deferred, much like a 401k. The newer type of IRA is the Roth IRA, which has the same contribution limits. However, this type of IRA is paid into with after-tax dollars. Any interest that a Roth IRA earns is then tax-free when withdrawn after retirement.
Current workers should begin planning their retirement by using one or both of these tools, although not all employers will offer a 401k option. A savings calculator with a retirement tool can inform individuals how much they can expect to earn on their contributions. After looking at the numbers from the savings calculator, workers can then increase or decrease their savings to insure they are able to have a reasonable standard of living in retirement.
Jennifer Anderson is a retirement specialist who works with such companies as to educate consumers about the importance of personal finance and saving for the future.