Pensions Ombudsman: Auto-enrolment complaints ‘will overtake liberation scams’

Anthony Arter

Disputes over automatic enrolment will overtake the number of pension liberation scams as small employers try to dodge new rules, the Pensions Ombudsman predicts.

In an interview with Money Marketing – to be published in March – Anthony Arter says he expects complaints arising from savers’ attempts to access their pension before the age of 55 to ease off. But he says requirements for every employer to provide a pension for eligible staff will take the place of scams.

He says: “In the future, my complaints will be around automatic enrolment. That will take the place of liberation. Once you have all the SMEs and people employing a single person and you’ve got 10 million people coming into pensions for the first time, there are going to be issues.

“For example, you could have someone who employs a nanny. They will say ‘I can’t be bothered with all this paperwork and setting up a pension arrangement. How about if I just give you an extra £20 a week?’

“The nanny might plan to work in the UK for only a summer. But actually in a few years’ time they might think they’ve been ripped off and have since decided to stay in the UK.

“They might value a pension as they get older and think they should not have been encouraged not to be enrolled and bring their complaint to the Pensions Ombudsman.”

A multi-force agency has been set up by the Government to tackle liberation scams where savers typically move from a legitimate scheme in order to withdraw cash or make risky investments.

But Arter says there is a difficult balance between protecting people and allowing individuals to take personal responsibility.

He says: “How much do you protect the individual if they have been warned and told of the dangers? Do you refuse to let them do something just because you think it’s rubbish? How far do you go before you allow someone to take their money and throw it in the river?

“It’s a difficult balance to achieve.”