The Pensions Ombudsman has published three determinations in relation to pension liberation, together with accompanying guidance. The cases all concerned members who had been denied a transfer from a personal pension arrangement to schemes that were said to be occupational pension schemes registered with HMRC, because the providers suspected that those schemes were in fact liberation vehicles. Although the transferring schemes were all personal pension arrangements, the Ombudsman’s findings are equally relevant to occupational schemes.
The Ombudsman’s judgment was based on whether the members had a statutory right to the transfer they had requested. On the facts, he found that none of the members had such a statutory right. However, he criticised the providers for not having carried out sufficient analysis to establish whether there was a statutory right.
Trustees’ process
The Ombudsman stated that, in case of suspected liberation activity, trustees should gather evidence to satisfy themselves as to whether the member has a statutory right to transfer to the receiving scheme. “Where they find that there is no right to transfer they should be expected to be able to justify that to the person asserting the right.” In an occupational scheme there will generally be a statutory right to a transfer, as long as the member’s benefits have not crystallised and, in the case of a defined benefit, that the member is not within 12 months of normal pension age.
If there is a statutory right to the transfer, although some delay in payment may be justified – while seeking satisfactory information about the receiving scheme, the transfer payment must be made, even if the trustees suspect that liberation activity is involved. It would, however, be appropriate to ensure that the member is aware of the dangers of pension liberation and the scams that exist, for instance by sending him a copy of the Pensions Regulator’s materials on this topic.
The Ombudsman did, however, add “In the end, though, once [the provider] had followed all the relevant steps, the individual’s right to make what might be a life-changing mistake must take supremacy over [the provider’s] obligation to help them not to.”