Are all "pension liberation" schemes a scam?

[delron72]

I have a local government pension pot. I have cancelled the pension as I am looking to emmigrate to canada. I would like to access the funds now if possible. I have found various websites which offer pension liberation. This is the explanation I received from a company I contacted:

You set up a UK limited Company as a personal management company
(PMC) "to use, manage, control and invest personal assets in a tax efficient
manner"

· You join the Lincoln Pension Administration (LPA) Umbrella
Remuneration Trust (UPENT)

· Your PMC enters into a fiduciary services agreement with the
Trustees of the UPENT which renders it a tax exempt entity because the
trustees of the scheme are outside the UK (Jersey or Belize)

· Your PMC provides you, its director, with sole use of the
trustees' discretionary powers in respect of the PMC's assets (your pension
"pot")

· Your existing pension(s) is/are transferred to the LPA UPENT using
standard pension transfer legislation - nothing clever there, IFAs and
Accountants do this all the time.

· You legally relinquish your rights to annuity and other benefits
from the scheme - which UK pension rules allow you to do.

· This makes your pension assets no longer pension assets that fall
under the Registered Pension Schemes legislation but simply ordinary assets
which can be treated as such

· LPA passes 89% of the now free asset value into the fiduciary care
of your PMC having deducted the 10% transfer fee and two ½% annual
administration charges in order to maintain the legal integrity of the
arrangement

· The director(s) or your PMC (you and your wife/partner) have sole
control over the use, investment and management of those assets as directors
of the PMC and tax free as fiduciaries.

· The PMC holds the "spare" 4% to make annually two ½% payments to
the Trustees for "administration" for the next 4 years - again to maintain
the legal integrity of the arrangement.

· You, the individual or Member of the UPENT, pays the PMC £100 per
month to maintain beneficial status of the UPENT in Law (you will appreciate
when you read on below about loans that you will merely be borrowing from
yourself and paying yourself back £100 per month) and to render the company
as tax exempt in law.

· In your capacity as fiduciary (acting on behalf of the UPENT
Trustees) you lend money to yourself .... the proceeds of a loan in your
hand is not income so no income tax.

· You pay no income tax anywhere in respect of the PMC assets and
provide for your lifestyle support through commercial loans from your PMC as
above

· The UPENT/PMC combination is not part of your estate so no
Inheritance Tax liability

· Money not required for Lifestyle Support remains within the tax
protection of the PMC for active or passive onward investment i.e. with your
fiduciary's hat on you buy and sell investments; these can be anything at
all, from property at home or abroad to precious metals, from stock market
options to ordinary investment funds such as your investment advisers are
using at the moment.

· The PMC is a tax exempt entity so whatever it buys and sells is
outside UK taxation, so when you sell assets there is no capital gains tax
for example

· There is no set up cost just two ½% administration charges per
annum (a total of 1%) for five years plus the 10% contribution charge, the
monthly £100 beneficiary status payment and an annual trustee management fee
of £200.

· It costs £14 per year to maintain the registration of the UK
Limited Company with Companies House

· We are paid out of the 10% contribution fee by the tax lawyers on
completion for your transfer.



Warnings on websites state that the individual may be stung with a massive tax bill as what these companies are suggesting is illegal and avoids tax? Any ideas? Thank you

[jorian23]

See http://www.thepensionsregulator.gov.uk/regulate-and-enforce/pension-liberation.aspx and read it before you do anything daft, like go along with this nonsense. Your pension can be paid to you in Canada when you reach retirement age - and you'll need it!

[montgomery69]

It's a scam. The Local Government Pension Scheme is just about the best scheme in existence. Especially before Cameron gets his grubby little hands on it.

I don't know what amount of time you have served, or your contributions... but it is almost certain that surrendering any of it's benefits would cause you to regret the decision in years to come.

I did 15 years in local government. I was lucky to have quite a decent job. I got made redundant at 54 years old, and I get just under £500 per month in pension... but I get that 'inflation proofed' for the rest of my life. More than the state pension which I will get when I'm 108 if Cameron has his way.

Do NOT give up what is probably the only sensible financial decision you have made in your life!

[ardwyad]

that does sound like a scam to me as well. i doubt that would be a good choice. like the other contributors i also suggest some much needed research as well. do not rely solely on the opinion of people you do not know. what i suggest is that you check out this site and learn how you can avoid capital gains altogether
http://www.avoidingcapitalgains.net

[ruelle]

take the advice on offer here,you will end up better off.