Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • February 2013
02

Regulator warns over pension liberation 'predators'

Open-access content Thursday 14th February 2013 — updated 4.30pm, Monday 4th May 2020

Savers are being warned against using schemes that promise to release their retirement cash before they reach 55 in a new campaign launched by government and The Pensions Regulator today.

Pension 'liberation' schemes encourage people to unlock their pensions savings before 55 in the form of either a cash lump sum or a loan. Hundreds of millions of pounds has been released from pensionsin this way, affecting thousands of people.

However, accessing a pension before 55 will normally be classed as an 'unauthorised payment' which can attract tax charges worth up to 70% of the payment value. The saver can also face administration fees from the 'liberation' scheme.

As well as leaving individuals poorer in retirement, The Pensions Regulator noted that the remainder of savers funds were likely to be invested in 'highly dubious and risky, unregulated' investment structures, often based overseas.

To address this, the regulator, the Department for Work and Pensions, Revenue & Customs and other agencies have launched a joint initiative aimed at both savers and pension scheme administrators illustrating the threat to people's pensions if they take up a 'liberation' offer.

This includes a warning that pension administrators and providers will be asked to include in the information they provide to members who request a pension transfer, as well as an 'action pack' for pension professionals, including a checklist and examples of what to look out for.

Steve Webb, minister for pensions, said: 'Money in a pension is there for retirement and should not be released before at least the age of 55. The government is investigating a number of schemes where firms appear to be preying on people when times are tight, and I am working closely with The Pensions Regulator to ensure rules are not being broken.'

The Pensions Regulator's chief executive Bill Galvin highlighted the important role that pension providers had to play in protecting their members from these 'predators'.

'The pensions industry needs to do what it can to protect members from these offers. There can be a huge sting in the tail for those that are tempted by the sales patter,' he said.

'Before considering any transfer requests, we want trustees, providers and administrators to consider whether members' savings are being transferred into a liberation scheme. Providers who don't carry out due diligence before processing a transfer may be placing members at high risk - and also exposing themselves to significant reputational damage.'

The initiative was welcomed by Tom McPhail, head of pensions research at consultancy Hargreaves Lansdown, who said: 'In light of the rapid escalation in pension unlocking activity, it is good news that the government is looking at ways to protect investors.

'Pension unlocking companies pose a real risk to unwary investors, causing additional hardship and misery to people who are very often in a difficult financial position to start with. Hopefully the measures now being introduced will at least cut down on the number of people who fall prey to these schemes.'

Margaret Snowdon, chair of the Pensions Administration Standards Association, added: 'We are supportive of all procedures that help administration professionals and, ultimately, members identify potentially suspicious transactions.'

This article appeared in our February 2013 issue of The Actuary .
Click here to view this issue

You may also be interested in...

ta

Pension scheme funding: implications of the chancellor's Autumn Statement

Chancellor George Osborne's Autumn Statement mentioned that the Department for Work and Pensions will be consulting on a new statutory objective for the Pensions Regulator to consider the long-term affordability of deficit recovery plans, and whether to allow companies undergoing scheme valuations in 2013 or later to smooth asset and liability values.
Monday 11th February 2013
Open-access content
2

MPs call for NEST restrictions to be ended immediately

Restrictions on who can join the pension scheme set up by the government as part of auto-enrolment should be ended now, MPs said today.
Friday 8th February 2013
Open-access content
2

Regulator launches pension scheme data-keeping probe

The Pensions Regulator has announced plans to check whether pension schemes are meeting its data-keeping standards.
Thursday 28th February 2013
Open-access content
2

Medical underwriting 'could cut de-risking costs by over 10%'

Taking pensioners’ health and lifestyle into account could reduce the cost of de-risking a defined benefit pension scheme by 10% or more, according to research published today by The Pensions Institute.
Monday 4th February 2013
Open-access content

Insurers' profits take £19bn hit following pre-crash high

Europe’s general insurance sector saw its profits fall by £19bn between 2007 and 2011, according to analysis published by PricewaterhouseCoopers yesterday.
Thursday 14th February 2013
Open-access content
ta

Building resilience to global risk

Rainer Egloff of Swiss Re takes a look at a new report which highlights the changing nature of risk worldwide and identifies ways to tackle emerging threats
Wednesday 13th February 2013
Open-access content

Latest from Regulation Standards

tfd

A matter of adjustment

Private assets will continue to shine even under the Treasury’s proposed changes to the Solvency II matching adjustment, says Ziling Jiang
Wednesday 2nd November 2022
Open-access content
ykf

A home run: reducing inequality through impact investing?

Sophie van Oosterom, Wojciech Herchel and Mark Callender consider how ‘impact investing’ in social housing could help to reduce inequality
Wednesday 5th October 2022
Open-access content
hgv

Exchange of ideas: IFRS 17 implementation in the Caribbean

Servaas Houben considers how IFRS 17 principles could benefit insurers in the Caribbean – and what European insurers could learn from the region when it comes to implementing the standard
Wednesday 31st August 2022
Open-access content

Latest from February 2013

2

Assessing model risk in practice

Alan Forrest of RBS Group explores how the risk that a model is not fit for purpose sits at the core of contemporary risk management
Wednesday 27th February 2013
Open-access content
2

Insurance industry launches annuity code of conduct

The Association of British Insurers has formally launched a new code of conduct to make it easier for retirees to make the right choices when they use their pension pot to buy an annuity.
Tuesday 26th February 2013
Open-access content

One third of UK adults 'are not saving for the future'

Almost one-third of the UK adult population are not currently saving for their future, suggesting a 'bleak future' for their ability to cope with future financial shocks, Scottish Widows said today.
Monday 25th February 2013
Open-access content

Latest from small_opening_image

2

COVID-19 forum for actuaries launched

A forum for actuaries has been launched to help the profession come together and learn how best to respond to the deadly coronavirus sweeping the world.
Wednesday 25th March 2020
Open-access content
2

Travel insurers expect record payouts this year

UK travel insurers expect to pay a record £275m to customers this year as coronavirus grounds flights across the world, the Association of British Insurers (ABI) has revealed.
Wednesday 25th March 2020
Open-access content
2

Grim economic forecasts made as countries lockdown

A sharp recession is imminent in the vast majority of developed and emerging economies as the deadly coronavirus forces businesses to shut down across the world.
Tuesday 24th March 2020
Open-access content

Latest from 02

2

Insurance industry launches annuity code of conduct

The Association of British Insurers has formally launched a new code of conduct to make it easier for retirees to make the right choices when they use their pension pot to buy an annuity.
Tuesday 26th February 2013
Open-access content

One third of UK adults 'are not saving for the future'

Almost one-third of the UK adult population are not currently saving for their future, suggesting a 'bleak future' for their ability to cope with future financial shocks, Scottish Widows said today.
Monday 25th February 2013
Open-access content

Half of pensioners 'missing out on state benefits'

Over 50% of pensioners are missing out on hundreds of pounds a year of state benefits they are entitled to, according to research published by Just Retirement Solutions yesterday.
Thursday 21st February 2013
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Investment Consultant

Scotland / Scotland, Edinburgh / London, England
Up to £70000.00 per annum
Reference
148689

Market Risk Capital Actuary/Quant

London (Central)
£65,000 - £115,000 plus bonus and package
Reference
148688

Experience Analysis Contractor

England
Negotiable
Reference
148687
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ