London, 27 April 2020: New data released from PensionBee shows a sharp increase in enquiries about early pension access as a result of coronavirus-related financial hardship. The online pension provider warns unscrupulous scammers could be targeting the most vulnerable via search engines, and calls for increased consumer caution.
As COVID-19 puts huge stress on the NHS, businesses and society, its financial consequences are already being felt by millions of individuals across the country. Analysis by PensionBee suggests that those under 55 who have lost their income might be looking to their pension pot in this time of hardship after finding sites online offering to help them ‘sell’ their pension.
Figures recently released by Action Fraud, highlighted a 400% increase in fraud reporting related to the coronavirus in the same month. PensionBee has also noticed an increase in enquiries about early pension release, compared to previous months. Analysis shows the average age of customers making enquiries about accessing funds early due to financial hardship was 35, 20 years younger than the legal age of access, which is 55.
Pensions are long-term investments designed to support savers through retirement. Attempting to take the cash early can result in loss of the entire pot and a 55% tax charge from HMRC, possibly leading to bankruptcy. HMRC rules are in place to prevent early release so that the pension is available to sustain later life when working is no longer possible. Only in cases of extreme ill health or terminal illness would early access be allowed, usually signed off by a doctor.
PensionBee does not allow early pension release but is increasingly concerned with the number of sites using Google Ads to mislead the financially vulnerable with information that it is possible to ‘sell’ or ‘cash in’ your pension early.
The first port of call for people seeking financial advice is often search engines like Google. A quick Google search of ‘early pension release under 55’ returns several paid for results to sites that ‘help you cash in your pension at any age’. These businesses are unregulated and could provide misleading misinformation about accessing a pension early.
Consumers should be aware that Google sponsored ads are not guarantees of reliability, and at times like this, should be mindful that pension scammers may use Google and similar search engines to target vulnerable people.
PensionBee urges consumers to seek reliable sources of information and always cross-check any online information with Pensionwise, The Pensions Advisory Service, Money Advice Service, HMRC, and / or Gov.uk. When dealing with any financial services provider check they are regulated by looking at the FCA register. You can also check ScamSmart for the FCA warning list for firms to avoid.
Clare Reilly, Head of Corporate Development commented: “COVID-19 has put us all in unchartered territory. One of the worrying economic side effects is the increasing number of people in their thirties who are considering taking the irreversible step of trying to access their pensions early. 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 and ‘free pension reviews’. Scammers prey on fear around economic uncertainty to mislead savers and are increasingly using search engines to add a layer of legitimacy to their operations.”
Appendix
Early withdrawal enquiries
| Total | October 2019 | November 2019 | December 2019 | March 2020 |
|---|---|---|---|---|
| 5 | 6 | 5 | 31 |
Customers enquiring about early withdrawal are on average in their 30s
| Month / year | Median age |
|---|---|
| October 2019 | 37 |
| November 2019 | 39 |
| March 2019 | 35 |
Customer quotes
PensionBee has seen an increase in requests from customers to withdraw money before they turn 55. Customers have contacted us to say they have been diagnosed with Covid-19 and want to access their pension, some have lost their jobs and are in severe financial difficulties due to Covid-19, many have written to say they are not eligible for government support and have need early access due to hardship.
PensionBee does not allow early pension release in cases other than terminal illness or severe ill health signed off by a registered medical professional.
One customer, aged 32, enquired, ‘I wanted to see if I could withdraw early as I have been made redundant due to Coronavirus and am 5 months pregnant’.
One customer, aged 33, enquired, ‘I was wondering if there was any help available with possibly gaining access to my pension pot. I have lost my job without pay due to the corona virus and I am unable to claim any benefits so I’m starting to worry about paying bills etc’.
