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Providers warn of surge in pension liberation scheme transfers




Providers are urging the Government to take tough action against pension liberation schemes as Friends Life and Aviva warn the number of attempted transfers is skyrocketing. 

Friends Life has seen refusals to “high-risk” schemes surge from just 56 in 2012 to 482 in the first five months of this year. In March, the provider turned down 132 transfers, more than six for every working day of the month.

Aviva says it blocked 322 transfers to suspected liberation schemes between October 2012 and May this year. It blocked 25 a month between October and December but that rate jumped up to over 60 a month in the four months to May.

Aviva head of corporate benefits policy John Lawson says firms are “fire fighting” and need Government action.

He says: “The volume is obviously accelerating. The number of staff we allocate to monitor it is going up all the time and it is beginning to cost businesses a lot of money to try and stop it. It is just wasteful activity. We need legislative change to slow it down.”

Legal & General pensions strategy director Adrian Boulding says the provider does not have specific numbers, but adds: “I am not surprised by the figures. The problem is it is so easy for pension liberation schemes to set themselves up because HMRC has virtually no checks when they authorise a pension scheme.”

A DWP spokesman says: “Pensions liberation fraud is a crime and we, along with the police and others across Government, are cracking down on these scams.”


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Well it will be very easy to go after the clients and get the tax of them for accessing the pension early as its cant be hard to notify the government of who has transfered into one of these schemes as all these companies will have there client records.

    This is proablably what the government is waiting for, let a few more do it and then when they think they can go and collect a few hundred million in tax they will get it then, why should they stop it now when they are building up a nice cash cow.

  2. Until the FCA start to enforce authorisation rules and stop the practise of pension transfers being done under “execution only” this is going to continue to be a problem.

    This isn’t only a problem for pension liberation, it is a massive problem for unregulated investment schemes like Harlequin and many others.

    Until the FCA start to exist that all pension transfers need to be done by a regulated authorised adviser this problem will continue and many clients will be disadvantaged.

    When was the last time we saw the regulator highlight the benefits of using a regulated authorised adviser in the media? answer: never.

    When was the last time the FCA pointed out that by using unauthorised advice givers or using execution only services you are not covered by the FSCS if things go wrong.

  3. Julian Stevens 20th June 2013 at 1:30 pm

    Perhaps our Glove Puppet pensions minister would do well to find out just why so many people are prepared to sacrifice so much of their pension funds just to get their hands on a bit of cash. It cannot be just the difficult economic conditions of the day, as he would doubtless try to suggest.

    Could it be a total lack of faith in the whole pensions system, about which Mr Webb is doing damn-all other than to press ahead with Auto-enrolment (into a manifestly broken system) and talking about Defined Ambition schemes? Defined Ambition? Most people would declare their ambitions as far as pension schemes are concerned is to have as little to do with them as possible. And for how much longer can companies such as British Airways, for example, continue running a final salary scheme with a deficit greater than the total value of the company itself? It’s crazy and before too much longer it’s all going to implode.

    But never mind that, Mr Webb would have us believe, Auto-enrolment and Defined Ambitions are the way forward.

    I cannot express in polite terms my contempt for the man.

  4. As I posted previously elsewhere:

    There is actually an easy way to stop this. Allow funds to be accessed legally. The 25% PCLS can be taken and the balance subject to the same rules as Triviality. The whole process under the current Regulatory oversights. That will put paid to the cowboys at a stroke.

    This might actually be welcomed by the population, bring some confidence back into the concept of pensions and allow people to do what the please with their own money – now that would be novel!

    However the pension providers would be squealing as of course they will lose assets under management and the fees and charges that go with it. What? You didn’t think they were warning for the good of the public did you? This is as always purely bleating in their own self-interest.

  5. It will be interesting to see if the Government do sit up and take notice and actually do something about it after all it is the “big boys” who are asking for something to be done.

    I say this because no one seems to take any notice of the small business owners who’s livings are being ruined by ambulance chasers throwing all and sundry at them in relation to PPI (vast majority of which are fraudulent or spurious claims at best)

  6. I agree with Harry. In have been arguing that small pension pots would cease to be a problem if the trivial pension limit was increased to 3 or even 5% of the lifetime allowance. Even better change flexible drawdown to an unlimited figure, I.e. allow the consumer to take their PCLS and as much of the remainder as soon as they like just tax it as income. OR change to flexible did, but remove the tax free lump sum if taken as flex did perhaps.

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