How HMRC passes the buck on Pension Liberation Fraud

liberation fraud

I hadn’t bothered much about pensions liberation fraud ; it sounded like a can of worms that would be sorted out by lawyers. I found myself having it all explained to me yesterday by “an experienced team of lawyers”.

The Pension Regulator have an “experienced team of lawyers” who button groups of trustees and read them the riot act on pension liberation fraud. You see it’s their job to stop the practice. Here’s one featured on PMI TV
pension liberation fraud spokesperson

The Pensions Regulator is determined to make sure that the trustees of occupational and their administrators stop the practice of transfers from one occupational scheme to another for the purposes of “illegal pension liberation”.

The sharp-witted of you may have already spotted a problem here. The principal issue is that the trustees have also an obligation to ease such transfers and in a world where “pot follows member” we might suppose they should be commended for making such transfers.

It does not seem to be so simple. Not all occupational pension schemes are the same, there are good ones which provide occupational pensions and bad ones set up to liberate pensions , earn fat fees for the liberators and leave the liberated with a big fat tax bill from HMRC.

It is ironic that HMRC are the beneficiaries of all this. Ironic because without the HMRC’s total failure to vet these occupational schemes, the loophole wouldn’t exist. HMRC are both the cause and the beneficiary of the loophole and the Pension Regulator seem to be aiding and abetting.

You see, amazingly, it is the HMRC who grant the registration of the occupational schemes which are set up to liberate pensions. The Pension Regulator suggests that any trustee should be able to see through the thin veneer of rectitude from these fraudulent outfits. Well the HMRC didn’t!

According to Christine Brightwell, an experienced lawyer herslelf and now head of Caledonian Trustees, the HMRC have been warned about their failure to properly check the provenance of occupational pension schemes applying for registration. So long as you are prepared to stump up the registration fee, you can promote yourself as an “HMRC registered scheme with no intention of every paying a pension. This is an outrageous state of affairs and till it stops, the practice of pension liberation fraud will continue to grow.

The Regulator said yesterday that when it last looked the size of the problem was £400m but it couldn’t tell what was going on today. I would suggest that with such a lax registration process, there’s a very great deal going on today!

And until HMRC smarten up their act, fake schemes will continue to proliferate, to nobody’s benefit than HMRC. Hardly the greatest of incentives for change at HMRC.

So here we have it.

One Government agency (tPR) is pointing the finger at occupational pension trustees and threatening them with the usual scare tactics (you’ll still be liable to pay the pension even though the assets are liberated).

Another agency of Government  (HMRC) keeps a low profile , trousers lots of extra tax from the “victims” and is absolved from blame by their colleagues.

The “victims” are the lucky ones – they get their funds liberated (albeit with a tax-bill) but if tPR are right can then go back to the trustees and sue to have their pensions paid in full – ON TOP!  (Perhaps this is a sensible strategy which maintains pension rights and get some sexycash early?)

The Liberators are within their rights to set up schemes (validated by HMRC registering these schemes) and though they are being hunted down, they appear to be acting within the letter (though not the spirit) of the law.

The only people who seem to be being dumped on are occupational pension trustees.

They have the most Hobsonian of choices

  1. Delay payment of pensions (and risk being sued by the member through the pension ombudsman
  2. Refuse to pay the pension and risk pointing the finger at a perfectly legitimate occupational scheme (and being sued by everyone)
  3. Paying the transfer and being told that they’ve got to pay the pension as well.

It shouldn’t be forgotten that the cost of any forensic work that trustees give their administrators is ultimately passed on to members and employers through higher funding requirements. The costs of the Pesnion Regulator and HMRC are met out of general taxation.

Trustees are paying people to tell them to pay people so that they can pass on a bill to the people who pay them. CLASSIC BUCK PASSING.


After the meeting, the “experienced team of lawyers” from the  Pension Regulator scurried off back to Brighton with their tails between their legs . I don’t blame them, they shouldn’t be covering up for  Her Majesty’s Revenue and Customs.

The unedifying sight of one Government Agency having to stick up for another without ever claiming “joined up Government” left me feeling awkward.

But I’m not a trustee. If I was a trustee, I’d be absolutely livid.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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7 Responses to How HMRC passes the buck on Pension Liberation Fraud

  1. Margaret Snowdon OBE says:

    Well said Henry! It is even worse than you say. There may be as many as 1000 people a month impacted by liberation (theft) schemes, as despite the tPR initiative, fraudsters have upped their game. It is totally obscene that schemes and administrators often have to foot the bill for this. I have seen charges and compensation claims that would make you gasp! There should be a safe haven for schemes and administrators that try to protect members from the fraudsters and sometimes from themselves. The regulators and HMRC ought to man up to this.

  2. One of the problems is the lack of media interest. Pensions fiddles can take 6 weeks or more in court and media outlets, who have all drastically reduced staff, tend to prefer the easy win of a day of benefit fiddling cases wrapped up in a fraction of the time – and also following the zeitgeist of “hating the scrounger”.
    Although these cases, and they are still offences, and should definitely be reported, can involve sums in the low thousands they produce quick and easy results.
    Pension cases are also frequently complex, sometimes perceived of as “boring” – even if they involve millions instead of thousands.
    We might see them reported in the trade media but that is not reaching the punters who are likely to be on the receiving end of the frauds.
    Perhaps the regulator/industry should pick up on these and use them to highlight the dangers in user-friendly language segmenting the cases on a regional basis and make the warnings more relevant to those at risk.

    • henry tapper says:

      What you say makes sense and I have to agree.

      Were this a kind of conveyancing fraud which ended in people being evicted from their houses, I’m sure it would be a more “media-friendly” crime. It’s the intangibility of the asset that makes it so hard to report.

      I’m not quite sure how you make pensions tangible, but were you able to make them pound for pound as valuable as a house or money in the bank, then the shock of these crimes would be that much greater.

  3. Batgirl says:

    Good news on the media frront- Pension Liberation was reported on in the Times yesterday and word has it that the Sunday Times will be publishing a story soon. The more awareness the better.

  4. Pingback: Pension Liberation – Releasing funds | CPC Worldwide Ltd

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