Pension transfer mailshots: Scam or legitimate?
Many of you have asked how to determine if offers received in the post are legitimate or part of a scam. Such offers have ranged from investments offering very high returns very quickly, to releasing cash from your pension ahead of your pension age, to how to invest to avoid income tax.
Generally we advise steering clear of anything that sounds too good to be true. If a company is authorised and regulated by the Financial Conduct Authority they are usually a bona fide company offering some sort of promotion. However, when is it ok to respond to such correspondence or take action?
One of our team recently received a mailing from Hargreaves Lansdown. This mailing asked recipients to consider transferring their pensions to a self-managed pension with Hargreaves, and included application forms to proceed with the transfer and their terms of business. While Hargreaves Lansdown is a legitimate company and is authorised and regulated by the Financial Conduct Authority, we feel that offering pension transfers by post does not demonstrate the most professional approach.
Of course, an approach that offers a pension analysis to determine if a transfer is appropriate would be understandable, and one that would be more in the recipient’s best interests. However, they are doing their potential clients a disservice by addressing a complex area of financial planning in such a relaxed way. Indeed, many pensions have enhancements and guarantees that can easily be lost upon transfer.
The four-page letter from Hargreaves addressed this point with just one line of warning. Therefore, the fact that some seemingly legitimate mailings may originate from reputable companies does not mean that their offering is in your best interests, so they are generally best avoided. It is preferable to deal with companies you know and trust. Any investment decision should be made only after careful analysis and consideration, not as a result of a simple letter.