Regulator shuts down £134m pension 'liberation' schemes
21 November 2014
Legal action by The Pensions Regulator has put a stop to five connected pension ‘liberation’ schemes that received transfers totalling more than £134 million from over 1,400 individuals.
The announcement explains that the regulator was concerned that the schemes were established with the main purpose of providing a cash payment to the member rather than providing retirement benefits and that this constituted misuse or misappropriation of pension scheme monies.
The schemes operated according to complex arrangements that purportedly enabled funds to be ‘lent’ to the member via a company under the member’s control, which would become their employer under one of the schemes. The member could then use the money as they wished.
The schemes sought to allow members to access their pension funds as cash through a supposed legal ‘loophole’. In May 2014, the High Court ruled that this supposed gap in the law did not exist, finding in the regulator’s favour on three preliminary legal issues.