We have seen a real step up in the approaches being made to scheme members by liberation companies, with even our pensions team members receiving texts and calls to encourage pensions liberation. This increased pension liberation activity led to the Pensions Regulator launching a public awareness campaign earlier this year (see http://www.shepwedd.co.uk/knowledge/?a=5013 for further information) and HMRC has now published new guidance on its website explaining the potential cost to members of transferring benefits to a pension liberation cheme www.hmrc.gov.uk/pensionschemes/liberation.htm.

HMRC’s guidance is written for the lay person and may be useful for trustees and scheme administrators when providing information to members on pension liberation fraud. As well as providing useful worked examples, it covers how such fraud is usually structured and sets out the serious tax, fees and investment risk consequences for members looking to access their pension savings earlier than permitted under current legislation.

Trustees should be alert to potential pension liberation fraud and we would advise them to liaise with their scheme administrators to discuss the best methods of assessing potentially affected transfers. Liberators will often target members who may be vulnerable and in debt, and key warning signs include members attempting to access their benefits before age 55 and harassing scheme trustees and administrators into making faster transfer payments. Inevitably some liberation schemes, set up to mirror legitimate schemes, may receive transfer payments made in good faith by trustees and scheme administrators. In that event the terms of the discharges in place will be subject to scrutiny and we would therefore recommend that trustees also review the discharges which need to be signed by members to provide a further alert to members.