The Pensions Ombudsman is coming under pressure from more than 40 retirement savers and advisers to rule in their favour on pension liberation complaints.
The ombudsman has confirmed 41 cases are under consideration as the result of complaints – up from just eight in November 2013.
Decisions on several of the cases are expected by the end of the month.
The pensions industry expects the ombudsman to come down in favour of savers despite the controversial status of pension liberation across the industry.
The complaints are against pension providers who are refusing to transfer funds to liberation outfits because of a combined industry push to stop pension liberation.
Poor financial decision
Pension liberation allows retirement savers under the age of 55 years old to access their funds early.
Although pension rules state this should only happen when a pension saver has a serious health issue, pension law is generally loosely written and gives providers no option other than to transfer a fund within a reasonable time if requested by the consumer.
However, in a bid to tighten up against pension liberation advisers, HMRC and pensions regulators have asked pension firms to slow down transfers to suspected liberation firms.
If the ombudsman rules in favour of consumers, then the fight against pension liberation could be seriously undermined.
The ombudsman is expected to argue that the pension fund belongs to the investor and even if they make a poor decision to unlock their money early, it’s their decision to make and not the remit of the pension firm holding the fund.
Regulators and pension providers are concerned that a decision along those lines will lead to a flood of pension liberation transfer requests as the ombudsman legitimises the practice.
Industry standards
A private initiative within the industry aims to tackle the problems of pension liberation.
A new trade body, The Pension Liberation Industry Group, is drafting a code to self-regulate switches between Qualifying Recognised Overseas Pension Schemes (QROPS), SiPPs and SSaS pensions.
Pensions minister Steve Webb has given the body his approval.
Margaret Snowdon, who chairs the pension liberation committee of the Pensions Administration Standards Association, is heading the new group.
“The industry needs a set of standards to manage pension transfers to reduce the number of pension liberation requests,” she said.
“We want a watertight code for the industry and to also discuss changing the law covering pension transfers.”
