Two pension providers were cleared of wrongdoing when transferring funds to another provider suspected of involvement in pension liberation fraud.
Pension Ombudsman Tony King decided Legal and General and Scottish Widows carried out their obligations when making the transferred by retirement saver Joseph Winning.
However, soon after the transfer, Mr Winning claims his £52,000 pension fund went missing.
He complained to the regulator that had he known the receiving scheme was a suspected pension liberation firm, he would not have authorised the transfer and that the providers should have warned him before releasing the cash.
Mr Winning also claimed HM Revenue & Customs (HMRC) had registered the scheme as a pension, so he considered the transfer was to a bona fide scheme.
Capita Oak
The ombudsman disagreed with this argument, expressing sympathy for Mr Winning’s plight.
He repeated earlier rulings in which the ombudsman supported the consumer’s statutory right to instruct a pension transfer overruled any other considerations raised by the provider.
In the ruling, the ombudsman explained Mr Winning paid £2,620 to the Capita Oak Pension Scheme, run by Imperial Trustees.
HMRC claims that Capita Oak may not qualify as a pension scheme, so any transfers in are regarded as unauthorised pension payments and attract a tax penalty of at least 55% of the transfer.
HMRC has yet to announce a decision on the tax status of Capita Oak.
In Mr Winning’s case, he has paid the fee and lost just over £52,000 and still could pay a tax penalty of more than £28,000.
Imperial Trustees have told Mr Winning that his cash was invested in a firm called Store First, a self-storage firm and that ‘nothing untoward’ appears to have happened to his money.
Due diligence responsibility
Providers seem to have a tough time with pension liberation schemes.
The ombudsman is dealing with almost 100 complaints against them.
Some concern transfer delays because the money has been requested by a suspected pension liberation scam scheme, while other retirement savers complain once the transfer to a pension liberation scheme has been made, their money has disappeared.
The issue seems to be The Pension Regulator, the official body supervising pension schemes, did not deliver any guidance to providers about how to deal with transfers to suspected pension liberation schemes until January 2013.
Nevertheless, the inference of the decisions is retirement savers are responsible for carrying out due diligence on a pension transfer before instructing a provider to release their cash.
