The Pensions Regulator has given the green light for providers and administrators to reject transfers to schemes they suspect are being used for ‘pension liberation’.
TPR, along with a number of other regulators and Government bodies, has launched a campaign to clamp down on schemes which allow people to access their pension fund before age 55.
Last month, Money Marketing revealed Hargreaves Lansdown and Standard Life had blocked transfers to schemes they suspect are being used for pension liberation.
The Pensions Regulator chief executive Bill Galvin says trustees, providers and administrators should help protect member interests by checking pension transfers are not going to liberation schemes.
Galvin says: “The pensions industry needs to do what it can to protect members from these offers.
“Before considering any transfer requests, we want trustees, providers and administrators to consider whether members’ savings are being transferred into a liberation scheme.
“Providers who do not carry out due diligence before processing a transfer may be placing members at high risk and also exposing themselves to significant reputational damage.”
Hargreaves Lansdown head of pensions research Tom McPhail says: “It is definitely helpful that the regulator has made it clear we can reject transfers where we see evidence of pensions liberation.
“But there is still an issue for trust-based schemes. Some trustees I have spoken to are concerned that the rules they are governed by prevent them from rejecting a transfer, so that is something we need clarity on.”
A J Bell says it has introduced procedures to prevent transfers to liberation schemes.
Marketing director Billy Mackay says: “We have had many cases in the past where we have suspected liberation is going on but we were not sure whether we could reject the transfer.
“TPR’s decision to publicly encourage blocking transfers is definitely a good thing and should help to protect investors.”