Pension liberation....

Malthusian

There is no legal loophole to remove funds from a pension before age 55 at all, even if you are desperate enough to pay 70% in total tax.

Unless serious ill health, terminal illness or protected scheme age applies, which are not pension liberation.

And did the High Court ever make Pension Liberation schemes illegal?

The court case was about whether pension liberation schemes should have their pension status declared invalid. It illustrates exactly how pension liberation is illegal. These schemes existed solely to make unauthorised payments and for that reason they didn't just have to pay 70% in tax, they were shut down by the Government.

xylophone

https://www.autoenrolment.co.uk/guides/pension-scams

Pension liberation

This type of scam typically targets those savers under the age of 55 and is also known as a pension loan, early pension release or simply cashing in your pension early. Unlike the other scams, pension liberation is completely legal but is almost certainly never a good idea…

Pension liberation is legal but is almost certainly not a good idea in almost every situation. Whilst taking up to 25% of your pension over the age of 55 is completely tax free, taking money out of your pension earlier than this age is classed as an 'unauthorised payment'. That means you can be liable for up to a huge 55% rate of tax on the withdrawal, as well as charges from the pension liberation company of up to 30%.

How to protect yourself
Do not think that because pension liberation is perfectly legal that this means it is a good idea; it almost always won't be and you will find yourself financially worse off. Just because a company is registered in the UK and has glossy marketing materials, it does not always make it a legitimate and sensible financial proposition.

And this links to

Pension Liberation Warning by HMRC

Under 55s - As those who are under the age of 55 cannot access their pension pot until 55, pensions liberation companies offer a legal, albeit unethical way of accessing their pension pot. People may get access to their pot, but the vast majority of it will be eaten up by sky high charges from the liberation company and HMRC taxes as accessing your pension early is classed as an unauthorised payment.

And from Scottish Widows https://www.scottishwidows.co.uk/about_us/security_information/pension_liberation_fraud.html

Some pension transfer schemes that offer to release your pension before age 55 can be illegal if you are misled or not informed about the consequences of entering into one of these arrangements. This could be because you’re not informed of the tax consequences, fees involved or how the remainder of your pension savings are invested.

xylophone

Re High Court judgement - found this

https://wedlakebell.com/pension-liberation-high-court-confirms-scheme-trustees-not-exonerated-under-the-scheme-rules/

What is pension liberation?

Pension schemes cannot usually make payments to members before their normal minimum pension age (which, since 6 April 2010, is usually age 55). To circumvent this, some schemes make investments into companies which then, through making other investments, including payments described as advisory fees, or commissions, or similar payments result in early payments to members of the scheme under age 55. Such arrangements are not, themselves, illegal, but the tax consequences are severe; with payments received by members taxable at up to 55% as unauthorised payments under the Finance Act 2004.

And the judgement appears to relate to the liability of the Trustees?

Malthusian

Professor Google is wrong again. Pension liberation is illegal as it is forbidden by official HMRC rules.

HMRC rules will not change regardless of how many random sales reps, usually copying and pasting from each other, get it wrong. Nor will the consequence of breaking them (potential scheme deregistration, the equivalent of capital punishment for a pension scheme acting illegally).

xylophone

Pension liberation is illegal as it is forbidden by official HMRC rules.

From HMRC

https://www.gov.uk/government/publications/pensions-liberation-guidance-note

See also https://www.thepensionsregulator.gov.uk/en/pension-scam

Surely it is pension liberation fraud (aka scam) that is illegal?

And nobody is saying that many pension liberation schemes did not involve fraud?

And from MSE itself https://www.moneysavingexpert.com/savings/pension-liberation/

Is pension liberation illegal

This is a complex legal question and is likely to depend on the type of model and whether or not it's been tested in court. Depending on how it's structured, pension liberation is not necessarily illegal. However, it's often accompanied by illegal practices, and it will trigger tax charges which the member must declare and pay to HMRC.
Where pension liberation starts to become illegal is where there's evidence of people being misled about the possible tax consequences of making such a transfer, as well as the release of pension money to them before they are entitled to receive it.
There may be instances where someone has been, for example, told about the tax charges and has decided to go ahead and make the transfer anyway. They've not been deceived and so there would be no criminality associated, but they would still be 'liberating' their pension.
However, in a situation where someone liberating their pension is told there would not be a tax charge (and the person saying this knows this is not to be the case), then this would be illegal.


In my very first post on the subject, I mentioned NUANCING (capitals just for emphasis - no intention of shouting).:)

Blackbeard_of_Perranporth

Oh bother. Enjoy your cruise OP

midlandsimon

Cannot even believe this is a real question to be honest!

atush

I can. Cant beleive they'd consider it though.

xylophone

Cannot even believe this is a real question to be honest!

I can - this is not the first time it has been asked.