Legal & General is reviewing its policy on blocking transfers to pension liberation schemes due to concerns its current position is at odds with HMRC guidance.
L&G currently warns members about the risks of taking their pension early if it suspects they are trying to move their fund to a liberation scheme.
It also delays moving the member’s money but does not block the transfer outright.
L&G pensions strategy director Adrian Boulding says it has recently received guidance from HMRC suggesting a transfer should only be completed if the receiving scheme operates in accordance with the requirements of a registered scheme.
He says: “Our position is that an individual in a money purchase scheme has a statutory right to a transfer and if the member wants to go to another HMRC registered pension scheme then ultimately they have the right to do so.
“We may delay the transfer and warn the customer about the implications but ultimately we will not block a transfer to a registered scheme.
“But HMRC’s interpretation suggests if the pension scheme is going to do something wrong – and some of them are quite blatant about the fact they are being used for liberation – then the statutory right to transfer might not apply.”
In January, Money Marketing revealed Hargreaves Lansdown and Standard Life have decided to block transfers to pension liberation schemes.
Forty Two Wealth Management partner Alan Dick says: “Providers are in a difficult position because if a client is determined to move their money it is not easy to say no.”