The Pensions Ombudsman has published the first three of his determinations relating to complaints where suspected pension scams (previously known as pensions liberation) transfers have not been allowed by the pensions provider.

These determinations have been eagerly awaited by the pensions industry to solve the conundrum faced by schemes as to whether the duty to pay a statutory transfer or the duty to act in members’ best interests takes precedence.


The cases all relate to complainants who had wanted to transfer away from their personal pension schemes but their pension providers had declined to make the transfers on the basis that pension scams were suspected. In each determination, the Ombudsman did not uphold the complaint and found that the complainants did not have a statutory right to transfer. However, he further found that none of the providers in question had carried out the analysis to establish that.

The three decisions in more detail

In all cases, the Pensions Ombudsman stated that the primary question for him to determine was whether the complainants had a legal right to transfer, and he noted that they could not be deprived of a statutory right by regulatory or other guidance. 

In both the cases of Mrs Kenyon, who had requested a transfer from the Zurich Personal Pension (no. 1A) Plan, and of Mrs Jerrard, who had requested a transfer from the AVIVA Personal Pension Scheme, the Ombudsman found that there was no statutory right to transfer. The reason for this was that the intended receiving schemes (the Axion Umbrella Pension Trust in the case of Mrs Kenyon, and the SCCL Pension Scheme in the case of Mrs Jerrard) did not fall within the definition of “occupational pension scheme” in section 1(1) of the Pension Schemes Act 1993 due to the wording of the rules of each scheme. 

However, while the Pensions Ombudsman found that the decision of the providers not to pay the transfer values was consistent with the law, neither provider had carried out the analysis to establish that. 

In the case of Mr Stobie, who had requested a transfer from the Standard Life Self Invested Personal Pension Scheme, the Pensions Ombudsman found that whilst the arrangement to which Mr Stobie wished to transfer (the Shredded Image Limited Pension Scheme) was an occupational pension scheme, Mr Stobie did not have a statutory transfer right on the basis that he was not an “earner” in relation to an employer of that scheme for the purposes of acquiring transfer credits under it in accordance with section 95(1) of the Pension Schemes Act 1993. 

Again, while the Pensions Ombudsman found that the decision of Standard Life not to pay the transfer value was consistent with the law, Standard Life had not looked into whether Mr Stobie had in fact a statutory right to the transfer, and had actually acted in a way which went beyond the Pensions Regulator’s guidance.


While it is helpful to finally have the Pensions Ombudsman’s initial determinations, they provide little comfort to trustees/providers who have refused transfers on the grounds of pension scams suspicion alone. 

The Pensions Ombudsman has concluded that a transfer can only be withheld if there is no statutory right to it. Whether a statutory right exists turns on complicated legal analysis as to whether the suspected scam scheme is an occupational pension scheme within the meaning of the Pension Schemes Act 1993, and, if it is, whether the transferring individual may acquire "transfer credits" as an "earner" under the rules of the scheme. The onus is on the trustees, manager or provider - rather than the member him/herself - to establish whether these two tests have been met. This may prove complicated, time-consuming and therefore costly. 

The most helpful aspect of the Pensions Ombudsman's determinations is that he has acknowledged the difficult situations that schemes and providers find themselves in, and that suspicions about pension scams activity may justify delaying the payment whilst questions are asked and evidence gathered. This will provide opportunity for engagement with the transferring individual to warn them about pensions scams and bring to their attention the associated financial risks, and he/she may then decide not to proceed with the transfer. Where trustees have actively engaged with members in this way and the member (with a statutory right) nevertheless proceeds with the transfer, it is difficult to criticise trustees for not having acted in the member’s best interests. 

It should be noted that the determinations all involved schemes established before HMRC altered its scheme registration process. Nevertheless, for existing registered “scam” schemes, ensuring that the tests determining whether there is a statutory transfer right are met may quickly be incorporated into a scammer’s strategy – and this has been recognised by the Pensions Ombudsman in the Stobie determination. Given that statutory transfers cannot be “blocked” merely on the grounds of pension scam suspicion, it is even more important now that individuals are made aware of the existence of scam arrangements, educated as to the significant financial consequences of transferring into them and encouraged to take professional independent financial advice.