Pension Liberation Schemes Warning
24 October 2013
HMRC has tightened restrictions on "unscrupulous" companies encouraging people to access their pension savings early. The schemes, commonly known as 'pension liberation', can have significant tax consequences.
The normal rule is that you cannot access pension savings before you reach the age of 55, or in some cases, even later. The so-called 'liberation' schemes try to get round this age threshold, but the costs are high.
HMRC has changed existing paperwork to deter pension liberation and safeguard pension savings. These changes, which take effect from 21 October, include:
- HMRC has made the pension scheme registration process more robust by conducting detailed risk assessment activity before making a decision on whether or not to register a scheme
- To help scheme administrators decide whether to make a transfer, HMRC has revised the process for responding to requests for confirmation of the registration status of the receiving scheme. Under this new process HMRC will respond to requests for confirmation of the registration status without seeking consent from the receiving scheme. However HMRC will only provide confirmation where the receiving scheme is registered and the information held by HMRC does not indicate a significant risk that the scheme was set up, or is being used, to facilitate pension liberation
- An HMRC factsheet explains the tax consequences of pension liberation on pension savers.