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Andrew Warwick-Thompson: The tide is turning on pension liberation

Andrew Warwick-Thompson TPR

Pension trustees, providers and administrators are at the frontline of disrupting pension liberation fraud. It is essential we stamp out activities that can leave vulnerable people’s retirement plans in tatters and undermine confidence in pension saving.

Our Scorpion guidance sets out a clear set of warning signs to look out for to help detect dodgy schemes and prevent members from transferring their funds into them. Many firms are blocking transfers to suspicious schemes and we welcome the enthusiasm and willingness we have seen to tackle the problem.

We want them to carry out due diligence when processing transfer requests and to include our Scorpion information in transfer packs to members, warning them of the risks. There should be no let up in this activity.

Those operating these scams may have felt they were acting with impunity, but the tide is beginning to turn.

The Pensions Regulator is working with a taskforce made up of Government, regulators, financial services bodies and criminal justice agencies to disrupt this activity and hold the perpetrators to account.

Police raids in May resulted in seven arrests and the regulator has appointed independent trustees to dozens of schemes.

HM Revenue & Customs recently announced it is strengthening its procedure for new registers of schemes, which is a significant development to prevent new schemes being set up to facilitate liberation.

The National Crime Agency has also been successful in taking down a number of websites that could have deceived people into losing their pension.

But we appreciate trustees and administrators can face a difficult balancing act. Trustees have a duty to carry out members’ transfer requests where the legislative requirements are met. 

Many trustees feel they can only delay for so long due to the threat of legal claims from members being taken to the Pensions Ombudsman. We recently held an industry summit to work through some of these challenges and discuss possible solutions, including potential legislative change in respect of transfers.

We will continue to work with industry stakeholders on next steps and possible responses.

Sadly, there is no magic bullet to stop this activity, short of preventing pension transfers altogether, which is clearly undesirable. There will always need to be a balance to allow members to move their pension pots and to allow legitimate transfers to go ahead.

It’s only by working together with Government, criminal justice agencies and the pensions community on a range of initiatives – to disrupt and raise awareness of pension liberation fraud – that we can beat the financial criminals.

Andrew Warwick-Thompson is executive director for DC, governance and administration at The Pensions Regulator



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There are 4 comments at the moment, we would love to hear your opinion too.

  1. The one thing that undermines people’s confidence in pensions more than anything else is the pathetically low annuity rates that are on offer due to the Bank of England keeping interest rates at record lows for such a long time. Combine that with the fact the government will tax your pension fund at 55% if you decide to risk drawdown, it’s no wonder people are disillusioned with pensions

  2. I meant to say tax the fund at 55% in the event of death.

  3. @ASBO only if the pension is paid out in kumpmsum form on death. If it is paid to a spouse or dependant as income, then it is taxablke under income tax rules, somnon taxpayer NIL, BRT is BRT and so on. A spouse or dependant with income over 20k secure, can take it all ijn one lumpmsubject to income tax I.e. for many 20% or 40%. Very few people with advice would pay 55%.

  4. Thanks Philip, but at the end of the day when the spouse dies there will still be a 55% tax charge on the fund. Very few people will have enough secure income to enable them to enter flexible drawdown.

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