Of interest to all schemes is awareness of pensions liberation scams. To date the Pensions Ombudsman (PO) has received about 140 complaints in relation to “pension liberation” or “pension scams”. On 9 January 2015, the PO published a further three determinations on this theme.

Mr X

The first such determination was published on 16 December 2014. It concerned the case of Mr X who transferred almost £370,000, representing the whole of his future pension, from the NHS Scotland pension Scheme to the Capita Oak Pension Scheme. Mr X was working in the NHS when he was encouraged to make the transfer, which also involved him opting out of the NHS scheme for the future. He was told he would receive investment returns of between 8 and 12 per cent after the transfer.

Once the transfer had been effected, Mr X became concerned about his decision and asked to transfer back out of the Capita Oak Scheme. However, the trustee of the receiving scheme, Imperial Trustees Services Ltd, did not respond to Mr X, despite his many attempts to contact them.

The PO directed the receiving trustee to pay a transfer value of at least the original amount, plus interest. Although the PO’s direction is enforceable in the courts, the PO noted that, even if the trustee engaged with enforcement, Mr X might find that some or all of his money had disappeared.

Mrs Kenyon (Zurich) and Mrs Jerrard (Aviva)

In these two cases, the PO found that there was no statutory right to transfer. The main reason was that the intended receiving schemes were not within the definition of “occupational pension scheme” under the Pension Schemes Act 1993 and the schemes did not identify a clear class or description of employments of the people for whom benefits were to be provided.

Mr Stobie (Standard Life)

In this case, although the intended scheme was an occupational scheme within the statutory definition, Mr Stobie was not an “earner” in relation to it, so the PO found there was no statutory right to transfer. However, under the rules of the Standard Life SIPP, Standard Life had discretion to pay a transfer value even where there was no statutory right. The PO partially upheld the member’s complaint that Standard Life refused to make the transfer. The PO noted that Standard Life had not followed the steps recommended in TPR’s guidance on pension liberation, and that Standard Life had not exercised its discretion under the SIPP’s rules properly. He directed them to consider payment when there was no statutory right to transfer.

However, the PO sounded a “serious note of caution” and suggested that Mr Stobie should take professional advice from a properly authorised person before taking a step that was at the least high risk, and at worst potentially financially disadvantageous.

View the Ombudsman’s update.

Comment

The PO notes that the above four cases reflect the environment in relation to tax and regulatory guidance as it was when the applications to transfer were made. However, there have been subsequent changes, particularly in relation to the registration requirements, as HMRC is now able to de-register pension schemes it suspects of being liberation schemes. TPR has recently stated that it intends to launch a consultation on new guidance for trustees handling transfer requests and this will be welcome, as current guidance could be outdated once the Budget flexibilities come into effect in April 2015.

These liberation cases do illustrate the difficulties for schemes and providers in dealing with possible pensions liberation. Where a member has a statutory transfer right that he is determined to exercise even in the face of severe warnings, trustees (or providers) cannot resist payment, so long as they have made such enquiries as they think necessary to establish the existence of the right.