Legal & General (L&G) has ramped up safeguards in its pension transfer processes to guard against liberation schemes.
L&G's move follows a campaign from The Pensions Regulator (TPR) warning of the dangers of such schemes.
Adrian Boulding, L&G pensions strategy director said: ‘We’re responding to an industry-wide concern that pension liberation is a growing problem, I think we’re acting farther and further and most, but I don’t understand why it takes so long for the regulator, HM Revenue & Customs and the rest to close down these schemes when they only take an afternoon to set up.’
'The regulator should be running these con men and scoundrels off the road.’
A two-tier approach means that if requests are made from a list of known and trusted firms L&G said they will be processed quickly and efficiently.
Boulding said: ‘The vast majority are firms L&G have dealt with for many years and whose employees are on a first name basis with our pensions specialists.’
The second tier involves requests from unknown or flagged firms triggering a series of due diligence tests and strict questioning. Legal guidelines allow up to six months for this due diligence period.
Boulding said: ‘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.’
Liberation schemes usually involve high charges deducted from the cash generated and can lead to a tax charge from HMRC of 55% for an unauthorised payment, leaving little cash from the total amount for the original claimant.
Boulding said: ‘By and large it’s desperate people that are stripping their pension, you can see the recession drivers behind this; people have lost their jobs; they’re out of work for a while; they’re desperately hard up; it’s difficult to borrow from the bank, and pensions liberation seems like an answer.
‘It’s very sad because they don’t get very much for the amount they’ve saved and their pension is gone.’