The fight against controversial pension liberation fraudsters has stepped up a gear with one firm working on a legal interpretation of a pension fund’s transfer rules to help protect their clients.
Legal and General is now taking a tougher stance when approached by pension liberation firms requesting that a pension pot be transferred.
They now have a range of responses from a blunt refusal and contacting customers directly warning them that their pension pot will face tax charges of up to 55% and the liberation firm will also charge a hefty fee for their services.
The Legal and General position is also being taken up by fellow pension firms Suffolk Life and Aegon UK.
Legal challenge
They are concerned that their customers’ savings will be devastated to the point of them living their retirement in poverty.
Adrian Boulding, who is head of pensions at Legal and General, said that they believe 1 in 20 transfer requests from pension schemes are from pension unlocking firms.
He added: “We won’t reveal what we look for as this may give liberation schemes an edge but we do ask certain questions and then inform the customer and delay the transfer.”
To back up their position, the pension firm is also working a legal interpretation of two sections of the Pensions Schemes Act 1993.
Sections 95 and 97 of the Act give a retirement saver the right to transfer their pension scheme and the holding firm must send the money to the calling firm within six months or the provider concerned could face a penalty.
Transfer delays
Mr Boulding confirmed that Legal and General drag their feet during the statutory six months until they are certain that the customer understands what they are asking for.
He also pointed out that the delay gives the firm time to answer a legal question over whether the transfer is legal.
Aegon UK receives around 10 suspicious requests a week, and a spokesman said: “If we are suspicious we will inform the client and send information from The Pensions Regulator and also refuse to carry out the transfer.”
The firm believes the procedure for setting up and registering a pension scheme is too easy.
Suffolk Life confirmed that they too often refuse or delay suspicious applications and pointed out that SIPP (Self-Invested Pension Providers) firms also have a difficult task since SIPPs offer flexibility and choice.
