Arrests follow alleged pension liberation fraud
Police have made a number of arrests in the first operation of its kind to tackle suspected fraudulent pension liberation schemes.
The City of London Police raided a call centre, seizing computers and documents in the operation.
Arrests were also made in Scotland and Cheshire.
The Pensions Regulator warned about pension liberation schemes when it launched an awareness campaign in February.
Depending on how it is structured, pension liberation is not necessarily illegal.
Police say that it starts to become illegal if there is evidence of members being misled about the possible tax consequences involved.Spam texts
Pension liberation schemes encourage people to access their pension savings before the age of 55, but tax charges and fees often slash the eventual payout.
An estimated £400m has been released in these schemes.
Introducers to the schemes, or advisers, use text messages, cold calls, or website promotions to encourage people to access their "frozen" pension.
At the scene
This is the first major police investigation into suspected pension liberation fraud. Their target was a call centre on the second floor of a building in the City.
When the signal was given, a sea of uniformed police officers and detectives poured into a very ordinary, drab office as stunned workers sat at their desks.
Police suspect they've uncovered an organised crime network, preying on vulnerable people with fraudulent offers that could ruin retirement plans.
They might suggest that people take a loan from the scheme provider, secured on their pension funds. Alternatively, the money might be transferred from the pension scheme into risky, unregulated investments often based overseas, the regulator said.
The scheme operators take a fee of 10% to 20% of the amount transferred.
More significantly, pension saving is tax privileged, under the proviso that the funds are not touched until the saver reaches the age of 55 at least.
By drawing on these funds early, HM Revenue and Customs (HMRC) will take up to 55% of the funds.Legality
The Information Commissioner's Office, which regulates marketing calls and text messages, has seen reports of spam text messages related to reclaiming pensions more than triple in the last six months.
It estimates that one in eight spam messages sent in March related to pensions. The office has seen a similar spike in cold calls relating to pensions.
In the first major police investigation into suspected fraud in this sector, police arrested three men in London. Two men were arrested in Ayr and Glasgow, and further arrests were made in Cheshire. This has formed part of a wider operation by police, regulators and the UK tax authority into the pension liberation activities.
Commander Steve Head, from the City of London Police, said: "People should think long and hard before releasing pension funds early and anyone who is cold called or text messaged with this or any other type of investment opportunity should put the phone down and not reply to the message."
Police are urging anyone who wishes to report a pension liberation scheme to contact Action Fraud.