Pension Liberation is a term used to describe any unlawful means used to achieve a release of funds, either during or before retirement. Both the FCA and the Pension’s Regulator in the UK have highlighted this issue as a major concern and one that appears to be on the rise.
Pension Liberation has been an issue in the offshore financial services world for a number of years. An obvious example of this type of practice, that has very recently been closed as a result of revised HMRC legislation, was the ability of some New Zealand QROPS to pay the entire value of an individual’s transferred pension as a lump sum. This form of “pension liberation” was heavily promoted, and this was on the basis that legislation in New Zealand meant it was entirely legal. But recent legislative changes implemented by HMRC were specifically designed to stop this practice and this action highlights the fact that regardless of what might seemingly be ‘allowed’ under the legislation of a local jurisdiction, where UK tax relieved funds are concerned HMRC will take appropriate action to ensure that no form of liberation of an individual’s pension is possible.
The following quote from The Pension’s Regulator in the UK supports this stance:
“There are no lawful means to achieve a release of funds before retirement through pension liberation.”
Pension Liberation is becoming more of an issue in the UK than has previously been the case. With a number of apparent “loopholes” being exploited to make payments outside of what is permitted under UK law.The recent reporting of “Pension Liberation” appears to have created quite the stir within the pensions industry. Concept believes that this should be reinforced to all IFA’s and to Member’s and so are taking this opportunity to advise of the implications entailed.
Roger Berry, Managing Director of Concept Group Limited appeared as guest speaker at the recent GAPP seminar on 24th April 2013. Roger provided insight to the topic of Pension Liberation and how it should not be taken lightly.