Police launch crackdown on pension scams which have fleeced pensioners of £400MIILION and become Britain's fastest growing fraud Thousands of people across the country fallen foul of telephone salesmen They're promised the cash will be reinvested in high-risk overseas funds In many cases gangs of criminals simply disappear with most of money Fraudsters are plundering hundreds of thousands of pounds from pensions every day in Britain's fastest growing scam, police warned last night. Thousands of people across the country have fallen foul of telephone salesmen who promise to "unlock" cash from their funds. More than £400m has been handed over with claims that the cash will be reinvested in high-risk overseas funds while providing an instant pay-out to policy holders. Dozens of officers swooped on a dingy rented office in the City where 40 people were working 12 hours a day to rip off unsuspected clients But in many cases gangs of organised criminals simply disappear with most of the money, tying up victims in a web of red tape and paperwork. The true scale of so-called "pension liberation" fraud was revealed as police swooped on the largest operation of its kind. Dozens of officers swooped on a dingy rented office in the City where 40 people were working 12 hours a day to rip off unsuspecting clients. They found highly-organised teams posing as financial advisors trying to persuade pension holders to sign over the rights to the funds. In many cases potential victims were targeted after replying to spam text messages offering to release lump sums from "frozen" pension pots. Three suspected ringleaders, aged in their 30s and 40s, were arrested ages on suspicion of conspiracy to defraud and money laundering. At the same time co-ordinated raids took place on other properties linked to the scam in Cheshire, Ayr and Glasgow. The raids were the first to target the pension-based fraud and were triggered by a torrent of complaints from potential victims. They came forward on losing their pension pot after being convinced to release savings with the promise of better returns and tax free advances. They found highly-organised teams posing as financial advisors trying to persuade pension holders to sign over the rights to the funds Police said the scam has replaced other types of notorious "boiler room" fraud such as selling useless shares, bogus wine investment schemes and fake carbon credits. Government ministers are so concerned they have asked City of London Police to team up with the Pensions Regulator and a host of other bodies to crack down on it. At the heart of the scam are tens of thousands of misleading spam text messages sent out to mobile phones every day. These offer pension holders a tax free lump sum pay-out and promise to invest the remaining pension in a higher risk but more lucrative off-shore scheme. Anyone who replies is passed on to gangs of salesmen who use high pressure sales techniques to grab control of pension pots. In the best case scenario victims face being taxed at a rate of up to 55 per cent, as well as other penalties, for withdrawing money before they reach pensionable age. At worst, they lose almost everything, either through spurious fees or theft as the money is spirited overseas and laundered through webs of companies. In many cases the last contact victims have with the fraudsters is when they sign over pension transfer documents which are couriered to and from their home. In fact, accessing pension savings before the minimum pension age is only possible in rare cases, such as when the holder has a terminal illness. Fraud experts believe the tough economic times are fuelling the fraud which exploits savers desperate for a better return on their investments. In the worst cases victims have lost more than a million pounds while hundreds have had their retirement plans destroyed. One trained accountant handed over a pension pot worth £20,000 when he was desperate for cash to secure a house purchase. Three suspected ringleaders, aged in their 30s and 40s, were arrested ages on suspicion of conspiracy to defraud and money laundering Another middle-aged man lost his entire pension when he approached a firm for a few thousand pounds to buy a motorbike. Police suspect the operation in the City, opposite Aldgate Tube station, has been running since January and has already changed name once. Those behind the fraud are suspected of deliberately choosing a similar name to a respected firm of financial advisors who have since been inundated with complaints. Det Insp Andy Fyfe, of City of London Police, said the fraudsters are preying on people who are already desperate to raise cash. He said: "We believe the people running these operations are serious criminals who are making serious amounts of money." His colleague, Commander Steve Head, added that people should think "long and hard" before releasing pension funds early. He said: "Pension liberation fraud is the new boiler room fraud phenomenon as fraudsters seek to exploit new opportunities thrown up by the changing economic climate. The promise of maximising returns on your pension savings may seem to make good financial sense. But the reality is you could be falling into a terrible trap which has the potential to destroy your retirement. Pensions Minister Stephen Webb said: "If you are offered a deal to unlock your pension, don't touch it."