The Pensions Ombudsman is currently dealing with around 45 complaints regarding pension liberation, with the majority of complaints concerning providers who did not allow a transfer to a pension liberation scheme.
Last year, FTAdviser revealed there were nine cases with the pensions ombudsman regarding pension liberation.
In an update to consumers, the ombudsman now has just under 40 complaints from people whose pension provider disallowed a transfer because the provider believes that its purpose is pension liberation. In October 2013, there were only eight of these cases.
The number has recently risen because of two groups of complaints about transfers to two different arrangements. It would not be right to describe this as a “flood”, the ombudsman said.
A handful of complaints are from people who did transfer but into arrangements that were subsequently effectively frozen due to regulatory action.
In a statement, the ombudsman said: “The people who complain to us insisting on their right to transfer will tend to be those who know what they are doing, and who believe that they are on the right side of the line.
“People who find they have been duped or are knowingly acting fraudulently are much less likely to complain that they should be allowed to transfer. So our cases will not represent a true cross section of those affected by pension liberation.”
Tony King, pensions ombudsman, previously told FTAdviser that the pension ombudsman’s starting position is that pension liberation schemes “are bad for people”.
He said: “At the least, pension liberation is not in their medium and long term interests and is likely to lumber them with a significant penal tax bill. At worst, the individual concerned will be participating in a fraud.
“The public should run a mile from anyone who says that they can arrange for their pensions to be accessed before age 55. The people selling these schemes are taking advantage of people’s financial vulnerability in order to rake off large sums for themselves at the expense of their ‘customer’s’ financial future.
“Whatever we decide in the cases that we look at, the fact remains that these arrangements are undesirable and exploitative.”
In the latest update, the ombudsman said that he is looking at the complaints against the “legal and regulatory background”, adding that he is aware that the decisions “may have wider implications for pension scheme members and the pensions industry”.
While the ombudsman said the timescale is “a little unpredictable”, it is likely the initial cases will be decided in April/May.
