Scammers may promise to boost your pension by moving it overseas through a QROPS. But they may not be legitimate.
It used to be that my dodgy calls were all at home where, at least, I could take some details. But one firm at least has my mobile. I can't write notes when I'm in the street. Nor can I, as many do, reject these “unknown number” calls – it could be the offer of work from a big company via a switchboard.
This call was from “Gregg” claiming to be a “city broker” (whatever that means). I told him – in all honesty – that I could not deal with him. I was shopping in Oxford Street.
He called again – after a gap of three weeks which is about par for this sort of firm – and found me at home. Now I could devote Gregg some serious time.
“Did I have a pension plan?” he asked me. I do.
“And are you happy with the performance?” As no one is ever happy with our high cost, unlikely to beat a child picking stocks with a pin, pension companies, my honest answer was “no”.
“So would you like a pension plan with outstanding results and a gift of £2,500 in cash in your pocket as well?”
A better pension fund? And money to spend as well? It would be a resounding yes if this did not smell like something that was just too good to be true.
Still, while I had no intention of handing over my sparse pension fund to a cold caller, I pushed him for details. All I had to do was to transfer my fund to a new management company.
Cream of the QROPS
And who and where was that? “It's based in the Seychelles for maximum tax savings. And because our partner in the Seychelles has lower costs than the expensive company you are now using, we can make this cash rebate. It would be even more if your fund was bigger or you had more than one fund,” Gregg said.
As far as I know, the Seychelles is outside the UK regulatory system, so I would be taking a big risk. But Gregg assured me that my money would be safe in the Seychelles and would be in something called “QROPS” so I could get all money out of the plan when I wanted, tax free, and would not be forced to buy an annuity.
QROPS stands for Qualifying Recognised Overseas Pension Scheme. It was set up some decades ago, primarily for UK pension holders who were emigrating to Australia, New Zealand or South Africa where retirement income rules are different. But more recently the scheme was sold to others as a way around UK tax rules.
This abuse has led to HMRC and FSA action.
Making money from bio-fuels
As I am not emigrating, I don't qualify but this did not stop Gregg. I asked him then about the superior returns he was offering.
“It's all based on timber investment and returns from bio-fuels,” he assured me. “The world has a high demand for these products and the United Nations is going to make it a law that a third of diesel has to come from bio-plants.”
I am not sure if the United Nations can make laws, but I know bio-fuels are controversial because they take up land that could be used to grow food. More importantly, bio-fuel plantations have been an active scam for the very simple reason that, even if they exist, they are almost impossible to value. You need substantial expertise to work out what any land producing an agricultural crop is worth – let alone something new like bio-fuels.
I tried to ask Gregg where the timber and land would be but he was vague, saying he would have to consult his manager first. Because I have no idea of the real cost of what I would be buying, it's clear that I could be charged almost anything, making it easy to give me the £2,500 – it would be my own money back. It is also easy to promise an attractive first- and second-year return – if you charge double or treble the price, then it is simple to offer 15% a year by returning part of the investor's over-payment.
I declined his offer. I may never hear from “city broker” Gregg again. But now my mobile is on the list, there will almost certainly be others chasing my tiny pension pot.
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