Personal Pension  

Webb promises to stamp out pension liberators

Government ministers, regulators and members of the pensions industry will meet this week to tackle the growing spectre of pensions liberation fraud.

On Thursday (12 September) a cross-governmental taskforce including the Department for Work and Pensions, the Pensions Regulator, the Financial Conduct Authority, the Serious Fraud Office and representatives from the industry will meet to discuss the next steps towards stamping out so-called “pensions liberation” fraud, in which a company claims to give early access to a portion of pension savings.

In all but a very few cases the process will result in 55 per cent tax penalties for the customer, with the remaining funds being invested outside the reach of UK regulators.

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The Thursday summit will be hosted by the Pensions Regulator.

Previously, John Lawson, head of policy for Aviva, told FTAdviser an estimated £500m at least is lost each year to pensions liberation scams, and that figure is on the increase.

With a lack of definitive government intervention, some insurers are taking matters into their own hands to block pension transfers they suspect are to liberation scams.

Mr Lawson revealed Aviva has stopped 250 people from transferring their pensions to such schemes.

Meanwhile LV has also admitted to blocking such transfers, and called on the government to allow early access to a pension’s tax-free lump sum to discourage savers from using pensions liberators instead.

Steve Webb, minister for pensions, said: “Pensions liberation fraud is a crime. That is why, as part of our plans to build a fairer society, we are working across government and industry to stamp it out and to raise awareness of the dangers of handing over your pension pot.

“By coming together this week we will look at what else could be done, including whether we may need to change the law.”