Suspect Pension Transfers Ignore Ombudsman Fears


Nearly 200 pension transfers put on ice by a consumer watchdog concerned over suspected fraud have gone ahead anyway.

The Pensions Ombudsman put the complaints on hold while one pension transfer row was decided in the High Court.

Retirement saver Donna-Marie Hughes claimed pension provider Royal London had no legal right to stop her pension transfer even though the company was worried about the receiving scheme.

Hughes took her case to the ombudsman to force Royal London to release the cash.

The ombudsman Anthony Artur agreed Royal London should have had concerns about the transfer and added his own fears that Ms Hughes over why she was moving her money when she had no earnings to support contributions.

Cape Verde investments

Hughes wanted to switch a £8,359 personal pension to a self-administered small scheme (SASS) that recommended property investments on the Cape Verde Islands.

The High Court ruled neither the ombudsman or the provider had the power to delay the transfer.

Now, almost 200 similar cases before the ombudsman have completed or been withdrawn.

“We understand that many of those applicants have since liaised with their trustees or administrators to pursue, or in some instances withdraw, their transfer requests and we will only be called upon further in their cases if a fresh dispute arises,” said the ombudsman.

“It is our understanding that there has been no further appeal of the High Court judgment in the case of Hughes versus Royal London.

Pension liberation concerns

“However, the government currently has an open consultation which includes proposals for amendments to address the issues arising in Hughes around earnings links with the receiving scheme, and for a ban on cold calling in relation to pensions.”

The case highlighted a loophole in pension laws that prevented providers halting a fund transfer even if the receiving fund was a suspected pension liberation scheme.

These pensions offer high-risk investments or financial arrangements that allow savers under 50 years old early access to their funds with a promise of no tax or penalties imposed by HM Revenue and Customs (HMRC).

Many providers tried to stop cash transfers to pension liberation schemes, but the Hughes case tested the legality of their actions – and the judge decided pension firms and regulators could not override a saver’s decision over what to do with their money.

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