2021 Autumn Term 1

The know zone

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    School business leaders are a vital part of education leadership but, sadly, many SLTs still do not include a business or finance lead. Here, ASCL Specialist Louise Hatswell shines a spotlight on their work. More
  • Academy Trust Handbook 2021
    ASCL Business Leadership Specialist and representative on the Education and Skills Funding Agency (ESFA) Academies Finance and Assurance Steering Group Hayley Dunn highlights the key changes from the recent update to the renamed Academy Trust Handbook. More
  • Vocational reform
    Highly significant changes to vocational qualifications are underway. Here, ASCL Specialist Kevin Gilmartin looks at the implications for students, schools and colleges. More
  • Don't believe the hype
    ASCL Pensions Specialist Jacques Szemalikowski shares tips and advice to help members avoid becoming victims of unscrupulous pension scammers. More
  • Wise words of wisdom
    Here, ASCL members share their advice for new leaders starting this September. More
  • Critical thinking
    Headteacher Hannah Millett says being on ASCL Council has helped her build a wider network of leaders to support her in her job. Here, she shares her passion for Council, leadership, football and not being afraid of criticism. More
  • Baby boom and bust
    Despite a short-term recruitment rush encouraged by the pandemic, we are still desperately short of secondary teachers. Carl Smith suggests some drastic remedies for the problem. More
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ASCL Pensions Specialist Jacques Szemalikowski shares tips and advice to help members avoid becoming victims of unscrupulous pension scammers.

Don’t believe the hype

Our members are reassured that both the Teachers’ Pension Scheme (TPS) and Local Government Pension Scheme (LGPS) secure your pension in a safe, public sector defined benefit (DB) scheme. They provide an inflation-proof guaranteed income for life. It is different to a defined contribution (DC) scheme – a private pension where your benefits depend on the performance of your investments.

The introduction of pension freedoms – some five years ago – does not apply to the TPS or LGPS, meaning that you cannot move funds from your TPS/LGPS into a DC pension. However, many ASCL members choose to invest in a second pension, usually through an additional voluntary contribution (AVC) DC scheme. Indeed, TPS and LGPS both have associated preferred AVC schemes for this very purpose.

Unfortunately though, following the deregulation, unscrupulous actors have developed sophisticated scams designed to relieve ASCL members of these additional pensions. So what can you do to ensure you don’t fall victim to a pension scam?

Cold calling

If you receive unwarranted contact about a pension opportunity, it is a scam. Pension cold calling is illegal. An unsolicited ‘free pension review’ will likely be dodgy. Likewise are emails, texts, social media messages or letters. Legitimate companies will not cold-contact you, and neither will they do so through friends or family.

You can search the Financial Conduct Authority’s (FCA’s) website (www.fca.org.uk/scamsmart) and scrutinise the FCA register of regulated companies (www.fca.org.uk/firms/financial-servicesregister) to check whether an organisation is authorised to offer advice. The FCA Consumer Helpline (www.fca.org.uk/contact) will further tell you if it is authorised specifically for pensions.

Moreover, pension scammers are adept at creating clone firms, with mirror websites, using the names, addresses and reference numbers of real FCA authorised companies. These even use official pension regulator anti-scam resources, feigning legitimacy. Never use the contact details you have been given, but rather use the link from the official FCA website (if you find the company there). If they are not FCA-authorised and you transfer a DC pension to them, you will not have access to any compensation schemes if it goes belly-up.

Seek independent financial advice

Don’t believe the hype’ to quote Public Enemy’s hip-hop classic and this is especially true of pensions. Always take independent financial advice before any pension transfer, even if this means turning down an ‘amazing deal’. ASCL’s Premier Partner, Lighthouse Financial Advice (www.lighthousefinancialsolutions.co.uk), will be able to provide this for members.

Be wary of phrases like ‘free pension review’, ‘loophole’ and ‘one-off investment’ as well as guarantees that offer better returns on pension savings. Complicated, long-term pension investments can result in victims transferring DC pensions, often not realising the scam for years.

Some scammers use phrases like ‘pension liberation’, ‘savings advance’ or ‘pension loans’, claiming tax loopholes to unlock your pension early. This is generally illegal and at best results in a substantial HMRC tax bill (sometimes over half of the value being ‘released’), on top of the 20% to 30% minimum often skimmed off by scammers.

Scammers might warn you that your current DC pension provider will dissuade you from transferring your funds, wanting to keep your money. Paradoxically, your provider is obliged to follow thorough due diligence on the receiving scheme and to protect your funds.

Some scammers may try to persuade you to take your entire pension as cash or a large lump sum to be invested in high-return funds, often overseas. These will invariably be high risk and unregulated. If it sounds too good to be true, it probably is. Don’t believe the hype.

Who to believe?

MoneyHelper (www.moneyhelper.org.uk) is a free, government-backed service that joins up money and pensions guidance to make it quicker and easier to find the right help. MoneyHelper brings together the support and services of three government-backed financial guidance providers: the Money Advice Service, The Pensions Advisory Service and Pension Wise.

The impact of pension scams can be heartbreaking for colleagues who have AVCs or an additional DC pension. As the Department for Work and Pensions reported this April (tinyurl.com/3zbsx9rz), last year, victims of pension scams lost on average £91,000 each.

ASCL members are very busy people, adept at running big budgets with due diligence. However, scammers rely on busy people. Please apply the same care to your own pension, avoid scammers and avoid becoming – to quote Public Enemy again – “ Prophets of Rage”.

Jacques Szemalikowski
ASCL Conditions of Employment