View more on these topics

Govt considers law changes to tackle pension liberation

Representatives from the Government, regulators and the pensions industry will meet this Thursday to discuss how to clamp down on pension liberation schemes.

The summit, which has been organised by The Pensions Regulator and will be attended by representatives from DWP, the Serious Fraud Office, the FCA and the pensions industry, will consider ways of tackling liberation schemes, including changes to the law.

Pensions minister Steve Webb says: “Pension liberation fraud is a crime. That is why, as part of our plans to build a fairer society, we are working across government and industry to stamp it out and to raise awareness of the dangers of handing over your pension pot. 

“By coming together this week we will look at what else could be done, including whether we may need to change the law.

“By signing up to one of these schemes you will destroy your future retirement savings. 

“The promise of easy money when times are tough is all too tempting, and there are far too many unscrupulous people who will prey upon this. These people want your pension pot and if you are offered a deal to unlock your pension, don’t touch it.”

In an interview with Money Marketing in May, Webb said the DWP is considering introducing tougher rules to discourage pension liberation schemes.

TPR has already taken steps to warn people about the dangers of using liberation schemes to access their pension early. In February, the regulator launched a communication campaign to raise awareness of the schemes among savers, trustees and advisers.

In May, police made arrests in London, Cheshire, Glasgow and Ayr following a major investigation into pension liberation fraud.

Providers have also attempted to stem the practice by blocking transfers to schemes they suspect are being used for liberation.


News and expert analysis straight to your inbox

Sign up


There are 9 comments at the moment, we would love to hear your opinion too.

  1. The one party that is largely to blame for this, HMRC, dont get a mention here.

    Why are they not attending as, arguably, its the lax pension scheme registration system that has let this happen.

  2. Richard Mattison Whitehall Group 9th September 2013 at 3:40 pm

    All that is needed to tackle this problem is to introduce a requirement for occupational pension schemes to have a professional Scheme Administrator who is registered with the Pensions Regulator and who has been deemed by the Regulator to be fit and proper to fulfil this role. Penalties could then be imposed on the Administrator for allowing pension liberation, such as suspending or removing their professional Administrator status which effectively puts them out of business. Another helpful rule change would be for one member occupational schemes to be registered with the Pensions Regulator so they have a complete record of all schemes under their regime. This is effectively reintroducing the old Pensioneer Trustee who was removed at A Day.

  3. Lets not forget it is NOT illegal to take 100% of your pension fund pre 55 so long as you pay 55% tax.

    Not good advice but if I had say a £200k pot and was just about to lose my house due to my business collapsing I would probably do it and pay the tax.

  4. Steve Webb says : By coming together this week we will look at what else could be done, including whether we may need to change the law.
    He could change the law about freezing the minority of ex-pats who have their pensions frozen after having paid their contributions in the same way as all of those who receive the uprated pension. They all paid in and should all withdraw under the same terms and conditions without question as to do otherwise is fraud Mr Webb.

  5. Anonymous , the problem Is that pension liberation schemes charge the client up to 30% in fees to get the money out, and the clients end up with 15% or so in a higher charging SIPP and 55% of the cash which they have to pay 55% tax on the money that has come out which is approx 85% of the fund.

    All without advice usually into Ucits for the balance of 15%.

  6. Anon and Anon,

    It’s even worse than that…as a condition of approval is that scheme rules do not permit unauthorised payments to be deliberately made, HMRC would be within their rights to de-register. That’s another 40% of the fund value before the unauthorised payment was made in tax charges levied on the Administrator.

    So on your £200k pot (even assuming no fees are paid!) that’d be an £80k deregistration charge, £80k unauthorised payment charge, £30k unauthorised payment surcharge, and a £30k scheme sanction charge.

    I make that £220k in tax bills. Enjoy your £200k lump sum…

  7. Nick White, Pensions Law Limited 10th September 2013 at 10:28 am


    It is true that HMRC might have grounds to de-register, either because information provided was incorrect or a declaration was false, or because the 25% threshold for scheme chargeable payments was exceeded, but the de-registration charge is not normally payable on the value of unauthorised payments, only on the value remaining within the scheme immediately before de-registration.

    The only time the 2 might overlap is if there is a deemed unauthorised payment, so that an unauthorised payment charge arises without the underlying value actually leaving the scheme.

  8. “Pension liberation fraud is a crime” no its not otherwise those perpetrators caught doing it would have been thrown in Jail.
    This article about changing the law has been posted about 4 times over the last few years and nothing has been done.

  9. Why not make unauthorised payments illegal? I guess it may reduce HMRC’s tax take.

    Professionals in all industries generally want increased regulation Mr Mattison, its tends to provide a mandate for higher fees and restrict the number of suppliers to the detriment of customers.

Leave a comment