FSA warns against pension loan schemes

In a recent news the Financial Services Authority (FSA) has raised a warning over the overcharging pension loan schemes offered by the different financial groups which access around 50% of the pension funds as cash.

This issue has been in notice due to the excessive promotion from companies offering loans against the pension funds.

The FSA has seen examples loans ads made to occupational pension schemes stating that people can take loans upto 50% of their pension funds.

The occupational schemes fall under the control of The Pension Regulator (TPR) and FSA said that the personal pension loans scheme falls under its regulations.

Generally the companies offering the personal pension loans take control of the pension funds and use them for the separate corporate bonds. The company then grant loans against those issued bonds and transfer half the amount as cash.

The FSA has recommended consumers to repay the full amount before retirement as because this will give them better future stability and a much more secured view for rest of your life. A joint team of different government agencies like FSA, TPR and HM Revenue and Customs (HMRC) will work together to gather more information on these kind of activities and find a way to bind it against law.