An industry group of trustees, administrators, legal advisors, insurers, regulators and consumer representatives has formed to tackle the growing problem of pension liberation scams.

The Pension Liberation Industry Group is being led by Margaret Snowdon, chairman of the Pensions Administration Standards Association (PASA) and JLT Employee Benefits director.

The group aims to launch a code of practice, which will set the standard for dealing with requests by pension scheme members wishing to transfer funds, by the beginning of Q2 this year.

Snowdon said: "Pension liberation needs to be halted in its tracks before it takes hold of the industry and infects the very foundation of pension savings.

"In 2013 we campaigned to highlight and educate members about this unscrupulous activity and I am delighted that we have secured an experienced and committed industry-wide working group.

"Together, we will create a code of practice covering all areas of pension transfers that the industry can adopt to limit pension liberation cases. As well as setting out industry guidelines, we will also be making recommendations for legislative and regulatory changes."

Pensions minister Steve Webb has acknowledged the group's efforts to tackle pension liberation scams in a letter to the industry.

He stated that in October last year, £420m of pension savings had been transferred to liberation schemes.

The code of practice is expected to act as a barrier against scams, by requiring:

- The transferring scheme to obtain information/evidence to provide reasonable assurance that the receiving scheme is valid
- Reasonable steps to minimise delay and provide reassurance to all parties
- Appropriate discharge forms
- Transparent communication with members and other parties
- The reporting of suspect cases

The scope of the code of practice will also include managing tax liabilities; handling complaints and insistent customers, handling transfers to SIPP, SSAS and QROPS; exploring a "safe harbour" agreement for trustees and providers who follow the code of practice; and recommendations for legislative or regulatory change.

The Pensions Regulator's Victoria Holmes said: "There is no silver bullet to halt this activity and it's only through the industry working closely with regulators and Government that we can prevent people's hard-earned retirement savings falling into the hands of pension predators.

"Pension scheme trustees and administrators are at the front line in the battle against these scams and we welcome this opportunity to work with them to preserve money in legitimate schemes."

First published 04.02.2014

monique_simpson@wilmington.co.uk