View more on these topics

MM leader: The battle to stop the pension ‘liberators’

A quick internet search reveals the large number of firms looking to lure investors with the prospect of accessing their pension early.

The adverts are less forthcoming about the huge fees levied and the likelihood of an unauthorised payment charge of 55 per cent of the investor’s pot for breaching HM Revenue & Customs rules.

Money Marketing first raised concerns about “pensions-unlocking” in early 2011 while the High Court last year ruled certain schemes were illegal.

The Pensions Regulator, the FSA and HMRC joined forces last February to warn of the dangers of pension liberation, with around £200m estimated to have been transferred to such schemes by that date.

Last year’s regulatory battle cry appears to have had little effect with The Pensions Regulator chief executive Bill Galvin telling the BBC that around £400m has now passed through illegal pension liberation schemes.

Not before time, it looks like regulators and the Government have realised the need to up their game.

A new crackdown announced this week involving Action Fraud, alongside the usual regulatory bodies, will see providers and administrators asked to include a two-page warning notice on “pension predators” in the information packs of those requesting a transfer.

There are a wide range of firms operating liberation schemes, from those who “technically operate within the law,” to borrow a worrying term from The Pensions Regulator, to the “outright illegal”.

TPR has published a checklist of warning signs for administrators and trustees and has publicly endorsed firms blocking transfers where they have concerns. A sharper eye from trustees or providers being used as a conduit to pensions liberation should significantly reduce the chances of more losses.

The suggestion that some trustees are still concerned rules prevent them from rejecting “dodgy” transfers must be addressed by authorities.

The best way to deal with rip-off pension liberation is strong regulatory action against individuals and firms, both to shut them down and act as an example to others.

TPR is currently working on 21 cases potentially affecting tens of thousands of investors, as well as a number of publicised actions to freeze assets and replace trustees.

However, such work can be complex, drawn out and often involves offshore assets which are difficult to trace. Alongside the long arm of the regulators, all those involved in pension transfers need to be sure they are not also part of the problem.


Treasury’s new bid to boost 95% LTV mortgages

The Treasury is holding talks with lenders and mortgage trade bodies to explore how mortgage indemnity guarantees can be used to improve access to 95 per cent loan-to-value mortgages, including offering Migs on older properties. Talks are at an early stage but Money Marketing understands the Treasury has discussed a mortgage indemnity scheme that would […]

Tony Wickenden: When you need to be aware of GAAR

The General Anti-Abuse Rule is seen by many as the ‘centerpiece’ of the Government’s attack on ‘unacceptable’ tax avoidance. The GAAR, in its proposed draft form, was, broadly speaking, intended to apply to ‘abusive tax arrangements’. An arrangement that had as its main purpose (or one of its main purposes) the avoidance of tax would […]


Providers: Govt consultancy charging ban should not be retrospective

Pension providers say advisers are unlikely to need to renegotiate existing consultancy charging terms with employers even if the Government carries out its threat to ban the practice for automatic enrolment. Consultancy charging is the regime designed by the FSA to allow advisers to deduct a charge from employees’ pension pots for advice given to […]


News and expert analysis straight to your inbox

Sign up


There are 2 comments at the moment, we would love to hear your opinion too.

  1. We need to start naming these schemes so as to allow trustees the information to block these transfers. Stop using the Data Protection Act as an excuse not to!

  2. It can take weeks if not months for a registered firm like Annuity Direct to prise pension money from occupational pension scheme administrators or life insurance companies to transfer to an open market option offered elsewhere.

    We are FSA registered and so are all the firms we pass the money to.

    I find it difficult to understand how these firms have prised out £400m from properly run pension schemes.

    When I was contacted by one of these firms to unlock my pension, they were staggeringly incompetent and no aspect of their operation was FSA approved. They used the name of an FSA approved firm as cover but this took 10 seconds on Google to see through.

    Given the huge time it takes to move money and the volume of data/forms required then some far reaching questions need to be asked of the schemes that have made the transfer.

    If they can’t check that the money is going to a bona fide source then what are they doing in the months it takes to process transfers?

    If TPR/FSA management can’t police this either then they might well be advised to stand aside for someone who can.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm