News type:
Wed 22 Apr 2015

22 April 2015

We have published decisions in two complaints made by Mr Winning against pension providers who had made transfers to the Capita Oak Pension Scheme at his request. The two cases are PO-5799 and PO-5930.

(The Capita Oak Pension Scheme was also the subject of a decision published in December 2014 in the case of “Mr X”. He had transferred to it and, concerned for his money, wanted to transfer out again. He complained when the trustees of that scheme did not respond to his request.)

Mr Winning’s transfers to the Capita Oak Pension Scheme were made in 2012. Mr Winning argued that the transferring providers, Legal and General and Scottish Widows, had not made adequate checks before paying the transfer values to the Capita Oak Pension Scheme.

We did not uphold the complaints. The transfers were requested before the Pensions Regulator had issued guidance on the subject; they were to a registered pension scheme and Mr Winning appeared to have a statutory right to transfer.  There was no reason for them to be withheld. And even if the providers had expressed concerns to Mr Winning he might have insisted.

The Ombudsman said that he had a great deal of sympathy for the position that Mr Winning was now in, but there had been no administrative failure by the providers in complying with his request.

There is further information for people who have made similar transfers in our news item “Transfers to Capita Oak”.

9 January 2015

Today we have published a further three determinations connected with “pension liberation” or “pension scams”. They follow the publication on 16 December 2014 of the case of “Mr X” who had transferred almost £370,000 to a scheme investing in storage units and was unable to recover the money. That case showed just how risky these schemes can be.

In the cases published today the complainants had all wanted to transfer away from personal pensions to schemes, different in each case, which were said to be an occupational pension scheme registered with HMRC. The providers of the personal pensions, also different in each case, had declined to make the transfer.

The determinations do not help “pension schemes” that may offer dubious freedoms. Nor do they serve as authority for genuine pension schemes to bar transfers on the grounds of mere suspicion or undisclosed information. They will provide some encouragement to schemes asked to pay a transfer value that have followed the regulatory guidance, obtained as much evidence as they can and made a reasoned decision about whether there is a right to transfer or not.

The Ombudsman’s approach

The three cases are similar and, in view of the public interest, the determinations all set out the regulatory, legislative and tax background in detail. They share some analysis and observations in common.

The Ombudsman noted that, following case law, when determining legal rights he has to reach a decision in effect equivalent to the decision a court would reach in the same circumstances. He considered whether the scheme members had a legal right to the transfer they had asked for, either in statute or under the transferring scheme’s own provisions.

The Ombudsman found that there was no statutory right to a transfer in any of the cases. But in none of them had the provider carried out the analysis to establish that.

As a secondary matter the Ombudsman considered whether the providers’ approaches had been consistent with their regulatory obligations, noting in two of the cases that the FCA regulated providers went beyond the Pensions Regulator’s guidance.

However, in his concluding remarks the Ombudsman acknowledged that schemes and pension providers “find themselves in a highly unenviable position”. He said that suspicions about pension liberation may justify delay for the asking of relevant questions. Strictly, though, a transfer could only be withheld beyond the statutory period for payment if there was no right to it. If, after enquiry, the trustees or providers concluded there was no right they should be able to justify that.

Mrs Kenyon (Zurich) and Mrs Jerrard (AVIVA)

In the cases of Mrs Kenyon and Mrs Jerrard the Ombudsman found that there was no statutory right to transfer. The main reason was that the intended receiving schemes were not within the definition of “occupational pension scheme” in the Pension Schemes Act 1993. The schemes did not identify a clear class or “description” of employments of the people that they were to provide benefits for.

Mr Stobie (Standard Life)

In Mr Stobie’s case, although the intended receiving scheme was an occupational pension scheme within the statutory definition, Mr Stobie was not an “earner” in relation to it so, as in the other two cases, the Ombudsman found he had no statutory right to transfer. However, under the rules of the Standard Life SIPP, Standard Life had discretion to pay a transfer value even where there was no statutory right. The Ombudsman found that Standard Life had not exercised discretion properly and directed them to consider payment.

But the Ombudsman added a “serious note of caution” suggesting that Mr Stobie should take professional advice from a properly authorised person before taking a step that was at the least high risk; at the worst he was about to be financially disadvantaged.


The three cases reflect the environment in relation to tax registration and regulatory guidance as it was when the applications to transfer were made. There have been changes since, particularly in registration requirements. However, the three cases, alongside that of “Mr X” published in December, illustrate the difficulties for schemes and providers in dealing with possible pension liberation. Mr X took a transfer and may have lost all his money: Mrs Kenyon, Mrs Jerrard and Mr Stobie wished to make similar transfers and perhaps would have lost theirs too (though the Pensions Ombudsman Service had no evidence of that). But if the transferors had had a statutory right that they were determined to enforce, even in the face of severe warnings, then, after the providers had made such enquiries as thought necessary to establish whether the right existed, the providers could not have further resisted payment.

16 December 2014

We have today published a determination by the Pensions Ombudsman of a case that relates to “pension liberation” or “pension scams”. This is the first such case that we have published. It concerns a scheme member who was persuaded to transfer out of his employer’s scheme and may have lost his money. In the new year we will publish a group of cases about people who wanted to transfer out, but whose transfers have been “blocked” by their pension schemes. We plan to do so in the week beginning 6 January.

The case published today shows how dangerous it can be to take advice to transfer to an unorthodox pension scheme on the promise of more freedom and high returns. The blameless scheme member may well have been duped out of a very significant amount of money representing his entire pension.

Anyone who is approached by an unregulated adviser recommending they transfer to a pension scheme of which they have never been a member should act with extreme caution. The adviser is unlikely to have their best interests at heart, and may be a fraudster.

What happened?

The determination concerns a transfer by Mr X of almost £370,000, which represented the whole of his future pension, from the NHS Scotland Pension Scheme to the Capita Oak Pension Scheme. Mr X was working in the NHS when he was encouraged to make the transfer, which also involved him opting out of the NHS Scheme for the future. He was not employed by a company connected to the Capita Oak Scheme but transferred his money to it anyway. He was told that he would get investment returns of 8 to 12%.

After the transfer had gone ahead, Mr X became concerned about his decision. He asked to transfer out of the Capita Oak Scheme. The trustee of the Capita Oak Scheme, Imperial Trustees Services Ltd, did not ever respond to his many attempts to communicate with them.

Our powers

We have power to decide Mr X’s rights under the Capita Oak Scheme. We are not a regulator, and we do not have power to punish the people who persuaded him to transfer. But we can direct people to pay money – and our directions are enforceable using the courts.

What we did

We decided that Mr X would have been entitled to transfer out of the Capita Oak Scheme on formal request, and the only reason he did not make such a request was that the trustee did not reply to him. We directed the trustee to pay a transfer value of at least the original amount, plus interest. Mr X can enforce the direction in the courts, though the Ombudsman noted that even if the trustee engaged with enforcement, Mr X might find that some or all of the money had disappeared.

24 October 2014

To date we have received around 140 complaints in relation to pension liberation.

Nearly 90% of these are from people whose pension provider has not allowed a transfer because the provider believes that its purpose is pension liberation.

Over seventy of these are about transfers to two different ‘pension’ arrangements, which we are already investigating.

The other complaints are from people who did transfer their pension benefits –

  • but the scheme they transferred to is no longer contactable, so they don’t know what has happened to their money; or
  • their pension benefits have since been effectively “frozen” in the new arrangement because of regulatory action.

The people who complain to us insisting on their right to transfer will tend to be those who know what they are doing, and who believe that they are on the right side of the line.

People who find they have been duped or are knowingly acting fraudulently are much less likely to complain that they should be allowed to transfer. So our cases will not represent a true cross section of those affected by pension liberation.

As noted in our last update we expect to be able to publish our decisions later this Autumn.

20 August 2014

The Pensions Ombudsman has received a number of complaints about pension liberation. Investigation into these cases is taking a little longer than we had hoped. 

The pension liberation cases that we are looking at need very careful consideration – in particular of the detail of the transferring and receiving schemes. We have needed to ask for extra information in most cases – and we need to give the parties the facts and the opportunity to make their own submissions and comment on our possible findings.

We recognise that the pensions industry is highly interested to know what the outcomes will be. Unfortunately we are not yet in a position to publish our decisions on any of the cases. We expect to be able to do so in the Autumn.

Here is some information about our approach to pension liberation cases:

About pension liberation

Pension liberation schemes are bad for people. At the least pension liberation is not in their medium and long term interests and is likely to leave them with a significant penal tax bill. At worst the individual concerned will be participating in a fraud. The public should avoid “advisers” who say that they can arrange for pensions to be accessed before age 55. The people selling these schemes are taking advantage of people’s financial vulnerability in order to make large sums for themselves at the expense of their “customer’s” financial future.

The Pensions Regulator has more information about pension liberation.

What are the key issues?

The Pensions Regulator has given guidance to pension schemes and pension providers about delaying transfers where it is believed that the destination is not a legitimate pension scheme.

What the pension scheme member is trying to do may be unwise and/or the consequence of exploitation, but the people who complain to us are likely to argue that what they are trying to do is not illegal or improper. They may also say that the pension scheme or provider is mistaken in their belief that the transfer was for the purpose of pension liberation.

What is the Pensions Ombudsman doing with these cases?

When we decide to investigate a complaint, that does not mean we think the person making it has a strong case. We look at almost all complaints that are within jurisdiction, without any view at the start about the chances of success.

We are some way into our investigation of a number of those that we received first. We are looking at them against the legal and regulatory background, being aware, of course, that our decisions may have wider implications for pension scheme members and the pensions industry.

When final decisions have been made, they will be published. The timescale is a little unpredictable because we have to make full enquiries and give the issues careful thought – and the parties have to be given a full opportunity to make their case.