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Providers block transfers to ‘pension unlocking’ schemes

Insurers and Sipp providers are blocking pension transfers to schemes which claim to allow people to access money from their fund before age 55.

Hargreaves Lansdown has suspended transfers to schemes it believes are using the Sipp provider as a conduit to allow people to access pension money early.

It is not clear why Hargreaves has been targeted, although industry sources say a number of major insurers have moved to stop transfers to schemes where there is evidence they are being used for “pension unlocking”.

Hargreaves Lansdown head of pensions research Tom McPhail (pictured) says: “We identified a trend of investors transferring into us and then immediately requesting to transfer out to particular schemes.

“If we feel investors are using us as a conduit to unlock a pension and we allow the transfer to go ahead, then we run the risk of any subsequent investigation reflecting poorly on us.

“We think it would be irresponsible of us to execute transfer instructions to these schemes. So where this situation arises we are now going back to our clients and offering to transfer the money to another pension or hold it with us.”

Standard Life confirms it has blocked transfers to certain schemes it suspects are being used for pension unlocking.

A spokesman says: “If Standard Life has grounds to suspect that the receiving scheme might possibly be involved in pension liberation, we will block the transfer and inform The Pensions Regulator that we have done so.”

AWD Chase de Vere head of communications Patrick Connolly says: “Stopping transfers to these schemes is absolutely the right thing to do and I hope others in the industry follow suit.”

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