City Trustees - part of Mattioli Woods

News and Media

27 March 2015

Pensions Perspective: Does Pensions Liberation really effect SSAS and SIPP's?

Yes, pension liberation affects all pension schemes, including SSAS and SIPPs.

Pension liberation is the transfer of an individual's pension funds to a scheme which allows them to access some or all of their savings before the age of 55. While in some cases this is legal, The Pensions Regulator (TPR) is concerned that some schemes are operating illegally, that they target the financially vulnerable, and that members are being misled about the consequences and downsides of transferring.

Trustees have been asked by TPR to watch out for and raise concerns should they see any warning signs indicating a transfer is part of a pension liberation scam. This can include scheme members requesting a transfer without an adviser, a member being under time pressure to complete the transfer value, a member having limited knowledge of the receiving scheme, and high charges being applied (by the receiving scheme and/or the adviser) that are deducted from the member's transfer value. If the charges are sufficiently high, this could render the actual transfer an unauthorised payment.

However, TPR is not able to waive a trustee's legal duty to carry out a transfer within any statutory deadline, and the trustees must carry out a transfer where all legislative requirements are met. Trustees who fail to do so can be fined by TPR, although TPR has indicated that where trustees have evidence that the receiving scheme is a pension liberation scheme, it will take this into account when deciding whether to impose a fine.

If a trustee delays or refuses a transfer payment due to concerns that the transfer may involve a pension liberation scheme, the trustees will retain the evidence that resulted in their decision and provide the member with the reasons for their concern. They will also highlight the potential risks of transferring. However, the member should also be given the opportunity to provide evidence that the transfer is not a pension liberation scheme.

SSAS and SIPP trustees are governed by the same responsibilities and are required to highlight to all clients transferring out the risk of pension liberation, and complete due diligence on any receiving scheme or vehicle.

SSASs could be a target for pension liberation as there is no legislative requirement for a pensioner trustee. HMRC now risk assesses all new SSAS applications to determine whether a scheme should be registered. Previously this was an automatic and immediate online process. While the risk assessment process makes it more difficult for fraudsters to set up new schemes, it does mean that there will be a delay when setting up a SSAS. This should be borne in mind if you are looking to set up a new SSAS to receive contributions urgently.

HMRC has also confirmed that, from April 2015, there will be additional requirements for the scheme administrator to show that they are 'fit and proper'. There will be additional safeguards to ensure that anyone running a pension scheme (together with the people who offer advice) are doing so wholly and mainly for the purposes of making authorised payments of pensions and lump sums in line with pension tax rules. As always, due diligence must be completed on every connected party transaction, with special attention being paid to the purchase of company shares and the payments of loan backs. Loans to members are strictly prohibited, but providers are required to ensure that a loan to an unconnected third party is not, in fact, an indirect payment to the member.

The Pensions Ombudsman has recently published determinations relating to suspected pension liberation cases, and there is much speculation that fraudsters will take advantage of the new freedoms available from April 2015 to target the over 55s to release their pension funds early.

Already there have been email scams to clients highlighting the 'pension freedoms' for the over 55s to 'take all their pension as a lump sum'. The Pensions Minister himself has been targeted by a text campaign.

While the new freedoms from April 2015 will enable the over 55s to access their pension funds as a lump sum, providers/administrators/trustees will need to comply with the Financial Conduct Authority directive that requires providers to be the 'second line of defence'. They will be required to ask any members looking to access total flexibility about key aspects of the circumstances that relate to the decision they are making, and provide the relevant risk warnings. From April 2015 all providers will be required to forward 'wake up packs' to all clients approaching retirement, alerting them to the new options available to them, and highlighting both the government's 'guidance guarantee' (called Pension Wise) or the need to seek regulated advice.

HMRC continues to raise the profile of the dangers of pension liberation to deter individuals from liberating their pension funds or investing in sham arrangements. They have confirmed that they will not hesitate to make further changes if necessary. Pension scammers are continually looking for new ways to target individuals and their pension savings. The action being taken by HMRC, TPR and providers such as Mattioli Woods to prevent these sorts of arrangements from operating, will go some way towards helping. But, ultimately, the scheme member bears the responsibility for obtaining the appropriate advice.


Pension Perspective is a weekly feature from City Trustees, covering questions that our experienced sales and technical teams have received from advisers. The Q&A covers a range of subjects including property, pension contributions, protection, auto-enrolment and more.

City Trustees operates a free technical helpline for advisers for support with pension challenges. Tel: 0116 240 8731 or email:


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City Trustees is a trading name of Mattioli Woods plc. For news updates on the Group, please visit our central News & Media on the Group website.