It says that schemes will now find it extremely difficult to prevent pension transfers to any registered pension scheme - regardless of whether they think it is a potential scam.
In the recent case of Hughes v Royal London, the High Court effectively overruled the Pensions Ombudsman’s determination to give pension administrators the ability to block transfers in certain circumstances without fear of future sanction.
Ms Hughes appealed a determination by the Pension Ombudsman who had ruled that she did not have a statutory right to transfer her benefits to her chosen arrangement as she was not “an earner” in receipt of earnings from an employer.
Upholding Ms Hughes’ appeal, Mr Justice Morgan held that it was not open to the Pensions Ombudsman to read additional words into the legislation and, as such, a general meaning had to be given to the word “earner”. Consequently, as Ms Hughes was in receipt of earnings from other sources, she was “an earner” and had a statutory right to transfer.
As a result, Equiniti says it will be easier for unwary pension members to "fall prey to criminal pension scammers".
Peter Scott, head of pension regulation and compliance, Equiniti Pension Solutions, said:
“This decision to overrule the Pension Ombudsman has come as a major blow to pension schemes and their administrators, many of which had restructured their anti-scamming processes in the light of the Pensions Ombudsman’s determination.
“In our view, the High Court’s decision has deprived the industry of a valuable tool in the fight against pension scamming and has further stretched the meaning of an occupational pension scheme. Not for the first time, we have to ask ourselves if the only way to bring an effective end to the pension scamming phenomenon is for fundamental changes to be made to the legislation underlying the transfer process.”
Commenting on the judgement in the case Hughes v. Royal London Group, a Royal London spokesman, said:
“Pensions Liberation and pensions fraud raise serious concerns for providers like Royal London. We therefore take transfer requests very seriously and look out for the warning signs highlighted by the Regulators and relevant guidance. In spite of what we might find, if a customer has a statutory right to a transfer then there is very little we can do if the customer wants to proceed.
"Royal London’s concern has only ever been to comply with the Regulatory guidance and to assist our policyholders to avoid circumstances where they risk losing all or part of their pension benefits.”
