Personal PensionJul 11 2014

Pension liberation accounts for 5% of complaints

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by

Pension liberation complaints have jumped to 52 in the 12 months to the end of March 2014 with the majority concerning blocked transfers, the Pension Ombudsman’s annual report has revealed

However, the report added that that there were a few groups of “multiple complaints brought by representatives who had been advising the transfers” and therefore this has slightly skewed the total figure.

Now pension liberation complaints accounts for 4.9 per cent of total complaints that the Pensions Ombudsman had received.

The annual report revealed the complaints about pension liberation were almost all about blocked transfers, where people had not been allowed to transfer out of schemes because the provider thought the intention was to take cash when tax tules do not allow it.

All complaints logged were against personal pension providers and none concerned transfers from occupational schemes.

A handful of complaints concerned transfers that have been made, but the funds could not now be accessed.

Adrian Boulding, pensions strategy director at Legal and General, previously told FTAdviser that the current law allows providers to defer transfers for six months without breaching the statutory rights of consumers.

He said: “If we delay for six months and alert HM Revenue and Customs and The Pensions Regulator, hopefully in this time HMRC would have rescinded the scheme’s authority.

“After six months the position is grey. We are caught between a rock and a hard place – if you don’t pay the transfer, they may have a claim, if we do pay the transfer, they may have a claim against us.

“If we allow pension liberation to go a head, we think there will later be a regulatory backlash.”

In February, FTAdviser revealed there were around 45 complaints, a massive increase from the nine that were with the ombudsman in October 2013.

The outcomes of the decisions were supposed to be published in April/May but in June, the ombudsman said the decisions were unlikely to be published until July.

The outcome of around 45 pension liberation complaints that are currently with the Pensions Ombudsman are unlikely to be published until July, a two month-delay on its original estimate.

The annual report said: “This is a matter which has been under the spotlight for the last year; providers and trustees are not in an easy position and scheme members are at risk of making decisions they will live to regret.

“But the people who complain to us are likely to argue that what they are trying to do is not illegal or improper.

“They may also say that the pension scheme or provider is mistaken in their belief that the transfer was for the purpose of pension liberation. We intend to publish clear decisions on these difficult cases so that in due course commentators and we will be able to publicise wider learning.”