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Ombudsman backs Royal London over rejected liberation transfer

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The Pensions Ombudsman has rejected a complaint against Royal London from a customer seeking to transfer their savings into a SSAS.

Donna-Marie Hughes, then aged 41, first tried to transfer her accumulated savings of £8,359.71 into the Babbacombe Road 1973 Limited SSAS in July 2014.

Hughes was contacted by Derby-based First Review Pension Services after expressing interest in transferring her pension fund into a SSAS. She then engaged Bespoke Pension Services to set up and administer the SSAS.

Royal London rejected Hughes’ transfer application, claiming it was not satisfied the scheme would be used to provide pension benefits. The firm said it would consider transfers to an alternative scheme.

In particular, the provider argued the SSAS could not be categorised as an occupational pension scheme, in part because the principal employer, a UK-based company incorporated on 4 June, shares a registered address with Hughes’ home address, and includes no specified nature of business.

Further, the provider noted that no accounts had yet been filed, and that Hughes is the only individual employed, and does not receive a salary.

In its ruling, the Ombudsman concluded Hughes did not have a right to transfer because her status as an earner was not in relation to the scheme employer.

Pensions ombudsman Anthony Arter said: “As Miss Hughes had no relevant earnings she was not an earner, and so her request for a cash equivalent transfer value was not for securing transfer credits. She had no statutory right to take a cash equivalent transfer value.

“In the absence of a statutory right, Royal London were then entitled to decided under Rule 10.2 whether to permit the transfer. The information they obtained and reviewed gave them legitimate concerns about the transfer.

“The fact that there was no statutory right and a concern about unauthorised payments, at least until Miss Hughes made a contribution to the SSAS, are relevant factors Royal London would be entitled to take into account in exercising that discretion.”

The ruling comes after the watchdog rejected members’ complaints in three pension liberation test cases, warning that providers need to do more due diligence before blocking transfer requests.

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