LEGAL & GENERAL TAKES STEPS TO PROTECT CUSTOMERS FROM PENSION LIBERATION SCHEMES.
25 February 2013
Legal & General has responded to the alert from The Pensions Regulator (tPR) of an increase in activity from Pension Liberation Schemes (PLSs), which could lead to a growing threat to customers’ retirement savings from fraudulent offers to “unlock” their pension.
In response Legal & General has initiated new procedures in the way it administers pension transfer requests, which should enable us to pick up an application from a company suspected to be operating a PLS in future.
Adrian Boulding, Legal & General’s Pensions Strategy Director explained “We have put in place a series of due diligence tests that will enable us to expose the schemes we have concerns about.
We will be asking for a lot more information and evidence from these people before we release our customers’ money to them. And unless they provide us with 100% satisfaction, we will be reporting any deficiencies we expose back to our customers.”
Adrian continued: “The vast majority of the applications for pension transfers we process are for payments to long established schemes that are known to us, and these good schemes will not be affected by the change in the process”
“But, where we have concerns, and this is just a small minority of cases, the law allows us up to six months to make investigations. So we can ask a series of penetrating questions of anyone we think is perpetrating fraudulent pension liberation. In cases of doubt, it’s better to delay than for a customer to risk losing most of their life savings.”
“What many people don’t appreciate is that these “Liberation Schemes” usually involve high charges, which are deducted from the cash generated and, if the pension is released to the customer, can also lead to a tax charge from HMRC of 55% for an unauthorised payment. That’s likely to come as a nasty surprise after the customer has spent the money!”
Adrian concluded “Customers should be very wary of any unsolicited offer to unlock their pension before age 55 or to extract more than 25% of the pot as cash for anyone over age 55.”
Legal & General also confirmed today that, as part of this new process, they will be sending all customers that request a pensions transfer a copy of the new Scorpion branded “Predators stalk your pension” customer information provided by The Pensions Regulator*.
Note*: the leaflet is part of the action pack for pension professionals produced in January by the Pensions Advisory Service in conjunction with tPR, HMRC and Action Fraud
Notes to editors
The information contained in this press release is intended solely for journalists and should not be relied upon by private investors or any other persons to make financial decisions.
Adrian Boulding was a member of the independent Making Automatic Enrolment Work Review appointed by Department for Work and Pensions in summer 2010.
He is also chair of the ABI committee engaged in the industry wide consultations on the Government’s proposed system for administering small pension pots.
For more information please contact:
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