Issue 14 - Pension Times

Pension savings could be one of the largest financial assets you will ever build, which makes them an attractive target for fraudsters. Pension scams are a growing problem, and it’s important for all members to understand how they work and how to protect themselves.

What is a pension scam?
A pension scam occurs when criminals attempt to trick you into transferring your pension savings into fraudulent schemes, or into making investments that are unlikely to deliver the promised returns. These scams can be highly convincing and often involve professional-looking websites, documents, and persuasive individuals.

Common warning signs
While scams can take many forms, there are several common red flags to watch out for:

• Unsolicited contact: Unexpected calls, emails, texts, or messages about your pension, especially from unknown organisations.
• High or guaranteed returns: Promises of unusually high or “guaranteed” returns, often with little or no risk.
• Pressure to act quickly: Scammers may push you to make a decision urgently to avoid missing out on an “opportunity.
• Unusual investments: Offers involving overseas investments, hotel developments, forestry, or other complex ventures you may not fully understand.
• Requests for personal details: Being asked to share sensitive information or to transfer your pension funds to a different scheme.
   

How to protect yourself
Taking a few simple precautions can significantly reduce your risk:

• Be cautious with personal information: Never share your pension details or personal information with someone you don’t trust.
• Check before you act: If you are considering transferring your pension, always check that the firm is authorised by the Financial Conduct Authority (FCA). Always remember that BCF is the only safe and suitable pension scheme for Community members.
• Seek impartial advice: Consult a regulated financial adviser or use trusted services such as MoneyHelper before making any decisions.
• Take your time: Don’t be rushed into making decisions about your pension. Legitimate opportunities will not require immediate action.

What to do if you’re concerned
If you suspect a pension scam, or if you have been contacted by a potential scammer:

• Report it to Action Fraud (the UK’s national fraud reporting centre)
• Inform your pension scheme administrator
• Contact the FCA or use ScamSmart for guidance
   

Final thoughts
Being informed is your best defence. If something sounds too good to be true, it probably is.
Taking the time to verify information and seek independent advice can help ensure your pension savings remain secure for your future.

Remember again that BCF is the only safe and suitable pension scheme for Community members.

Pensions and Inheritance Tax: Key Changes from 6 April 2027
Significant changes to how pensions are treated for inheritance tax (IHT) will come into effect on 6 April 2027. These reforms represent one of the biggest shifts in pension taxation in recent years and may affect how your benefits are passed on to your loved ones.

What is changing?
From 6 April 2027, most unused pension funds and certain death benefits will be included in your estate for inheritance tax purposes. This is a major departure from current rules, under which pension savings are typically held outside your estate and can often be passed on free of IHT.

Under the new rules:

• Unused defined contribution pension savings (including
  drawdown funds) will generally form part of your estate
• Most lump-sum death benefits from pension schemes will also be included

If your total estate (including your pension) exceeds the available IHT allowances, tax of up to 40% may apply on the excess

What is not changing?
Despite the reforms, some important protections remain:

• Spouse and civil partner exemptions will continue to apply (transfers are generally IHT-free)
• Many estates will still not pay IHT at all, as they remain below current thresholds

Practical implications
These changes mean that pensions may no longer be as effective for inheritance planning as they once were. For some members, including pension savings in the estate could:

• Push the total estate above IHT thresholds
• Increase the amount of tax payable by beneficiaries
• Add additional administrative responsibilities for personal representatives handling the estate

Why are these changes being introduced?
The Government has stated that the reforms are intended to ensure pensions are used primarily for retirement income, rather than as a vehicle for passing on wealth free of
inheritance tax.

In recent years, pensions have increasingly been used in estate planning because of their favourable tax treatment, and these changes are designed to reduce that advantage.

What does this mean for beneficiaries?
From April 2027, beneficiaries may face a different tax position:

• Pension funds may now be subject to inheritance tax before being paid out
• If you die after age 75, beneficiaries may still pay income tax on withdrawals, in addition to any IHT charge.

In some cases, this could result in a higher overall tax burden than under the current system.

What should you do now?
While the changes do not take effect until April 2027, it’s a good idea to review your arrangements:

• Keep your beneficiary nomination forms up to date
• Consider how your pension fits into your overall financial plans
• Seek advice or guidance if you are not sure what is best for your circumstances