St. James’s Place (SJP) has issued a warning over the possibility that the upcoming changes to inheritance tax (IHT) rules could make people more vulnerable to scams.
From next April, unspent pension pots will fall into the IHT net. This creates the possibility that people wishing to mitigate the tax grab will be more open to options, and unfortunately more vulnerable to fraud.
Claire Trott, head of advice at SJP, said: “With unused pension savings due to be brought inside the IHT net from April 2027, and the legislation and communication around how this will work remaining vague, savers may feel unsettled and unsure about whether to continue putting money into their pension.
“Some people may even be tempted to withdraw large sums from their pension out of fear their families will be hit with an IHT tax bill in future. This is particularly worrying as it can increase vulnerability to potential scams.”
Trott noted that pension providers offer protection against scams when the money is held with them. However when savings are taken out of these schemes these protections go away.
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She added withdrawing funds with no real plan for what to do with the money puts people at a higher risk of falling for scams too.
“They may be approached by someone offering to take care of their cash IHT free, and while this may sound appealing, it could be a scam.
“Anyone that is considering accessing their pension to avoid an IHT bill should seek financial guidance where possible, especially if they’re taking money out without knowing what to do with it.
“It’s important to be armed with information about how to navigate the upcoming changes, but also to ensure hard-earned pension savings are kept safe from scammers.”
To reduce the risk of being defrauded, Trott suggested pension holders be wary of unsolicited calls, refuse to be rushed to take action, be aware of red flags such as ‘high or guaranteed returns’, ‘overseas investments’ or schemes that seem too good to be true, and finally, only use trusted information sources such as government-backed services like Money Advice Helper or Pension Wise.
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