Pension liberation — what you need to know
Pension liberation schemes typically offer cash incentives to members to transfer their pension savings to a scheme from where a cash lump sum representing some or all of the value is ‘unlocked’ and paid to the member. They are not illegal, but sometimes the incentive is offered alongside deliberately misleading and incomplete information about the consequences of taking up the offer, which can be fraudulent. The cash incentives are variously dubbed ‘pensions loans’, ‘savings advances’ and sometimes ‘pensions unlocking’.
The Pensions Regulator reports that since 2008 there has been a significant increase in the number of such arrangements that are being offered. Further, many of the entities offering pension liberation schemes do so by cold-calling members or sending unsolicited text messages or emails, often targeted at people who have already taken short-term and ‘pay-day’ loans.
The providers of these schemes offer to arrange the transfer and payment of a lump sum before the minimum retirement age of 55 in exchange for a fee. Frequently, they promise to do this by transferring the member’s pension from a registered pension arrangement – from which the member could not usually take cash before their minimum retirement age at all because of restrictions in the rules – to another from where some or all of the value of the pension will be released as cash. What the providers often do not explain is why the member cannot take cash from the transferring arrangement, nor do they necessarily explain the tax consequences of taking a lump sum after the pension is transferred…
If you are registered and logged in to the site, click on the link below to read the rest of the Taylor Wessing briefing. If not, please register or sign in with your details below.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Taylor Wessing
News from The Lawyer
Briefings from Taylor Wessing
For the tax year from 6 April 2014, the standard lifetime allowance has reduced from £1.5m to £1.25m.
One of the areas highlighted last year by the Regulator was the regulation of workplace DC pension schemes.
Analysis from The Lawyer
As the equity capital markets rocketed back into favour and global M&A saw at least a partial return to form, there have been some rich pickings for The Lawyer’s Corporate Team of the Year award shortlisted firms in 2014.
The city-state is working hard to become a global wealth management hub, and law firms are gearing up for a prosperous new world