Legal and General has reversed a decision to block a transfer to a pension scheme which has been subject to a number of refusals by life companies over ‘pension liberation’ concerns, and which was subject to a complaint with the Pensions Ombudsman.
In correspondence seen by FTAdviser between Manchester-based Warwick and Eaton, which administers the SCCL scheme subject to the blocks, the Pensions Ombudsman and L&G, it is revealed that the provider changed its stance in April, six months after it had initially decided to block the transfer.
A complaint that had been with the Ombudsman - one of 16 raised in relation to blocked transfers by a number of life companies - was subsequently withdrawn.
Under the Pension Scheme Act 1993, a transfer must take place within six months or the provider risks incurring a penalty. L&G has previously said that where pension liberation is suspected but not proven, the interpretation of this rule becomes a “grey area”.
Simon Walker, director at Warwick and Eaton said in response to L&G’s decision: “We are delighted that L&G took another look at the scheme. They reviewed what we’d said and then decided to transfer.”
Legal and General declined to comment.
Earlier this year it was reported that number of providers were blocking transfers to the SCCL scheme, including major life insurers such as L&G, Aviva and Standard Life.
Warwick and Eaton has now referred 16 cases to the Ombudsman against providers with regard to blocked transfers. However, the firm said these cases still have not been attributed an investigator as delays continue over the publication of a number of complaints.
The Ombudsman has twice delayed the publication of a number of decisions - originally around 45 but now believed to be more than 80 - from an original estimate of May. A further update is expected this month, when publication is likely to be postponed further.
A spokesperson for Aviva said: “The cases remain before the Pension Ombudsman. As a result we have no comment to make at this time.”
A spokesperson for Standard Life said that the firm was unable to comment on individual cases, but added: “We are fully committed to preventing our customers falling victim to pension liberation schemes.
“The decision on whether or not to transfer to a scheme is based on a number of factors, including Pensions Regulator guidance, HMRC advice on the status of the receiving scheme and whether HMRC are aware of any concerns regarding potential liberation.
“We will not make a transfer payment in any case where we suspect that liberation may be involved and in total we have refused over 370 transfers to date.”
Mr Walker added of schemes which are currently blocking transfers: “It doesn’t really matter to us – they are big schemes but for members involved they are laboured with admin charges and it seems quite wrong.
“To us admins it’s frustrating and of course we’d like the members to be in the scheme. They shouldn’t be charging and making profits out of a member while they are awaiting a decision.
“Something appears very wrong... Clarity is what is needed from the Ombudsman in how they are going to act. It seems stupid to wait for the Ombudsman if you know they are never going to report.”
Current rules mean HMRC typically ‘registers’ occupational pension schemes with little to no formal checks, meaning firms are often left in a difficult position if the watchdog refuses to close a scheme during the six-month delay window.
New powers handed to HMRC at this year’s Budget broaden its ability to refuse to register a pension scheme if it believes it will be used as a liberation vehicle.