Prudential head of business development Vince Smith-Hughes has called on the Government to introduce legislation to crack down on pensions liberation schemes.
Speaking at a Prudential panel debate in London today, Smith-Hughes said liberation schemes are taking advantage of the pensions freedom narrative to convince people they can take their money before they are 55.
The Pensions Regulator has been running a consumer awareness campaign warning people not to use liberation schemes but Smith-Hughes said this may not be enough.
He said: “Raising awareness has to be the first thing to do but I’d like to see more done on the legislation front if I’m honest to try and stop these things from happening.
“Providers like us have a list of schemes we know we are not going to be transferring money to, but it is almost continual that more schemes are coming out of the woodwork.
“I just feel there is another opportunity for those people next April to again try and encourage people out of schemes and we really have to be guarding against that. Ultimately if we can legislate against it we certainly should do and take that risk away.”
Liberation schemes are not technically illegal, but those taking their money before they are age 55 face a 55 per cent tax charge which the schemes often do not tell them about.
In August, Money Marketing reported on how pensions liberation schemes are evolving, with those running them now more likely to set up high fee self-administered pension schemes.