The high court in London ruled on Friday that life insurer Royal London on Friday should have allowed a policyholder to transfer her pension pot to a different pension scheme, in a case which lawyers said could have repercussions across the sector.
Royal London told Donna-Marie Hughes in 2014 she could not switch her pension to a self-administered scheme, in part because of concerns about “pensions liberation” scams where investors have been encouraged to take out their cash to put into riskier investments with high administration charges.
The high court said in a judgment on Friday it overturned a decision by the Pensions Ombudsman, which had last year backed Royal London’s decision.
Royal London said in a statement it would comply with Friday’s judgment.
“The consequences of this ruling are far-reaching and could leave pension scheme members more exposed to the risk of scams,” Royal London’s lawyers Pinsent Mason said in a statement.
“It will now be far easier for individuals to move their money from legitimate schemes, ultimately leading to a potential influx of monies into suspicious schemes, as the hands of those being asked to make transfers are increasingly tied by the inflexibility of the law.”
However, Penny Cogher, pensions partner at law firm Irwin Mitchell, said there were many self-administered schemes in the sector and the ruling would “result in a sigh of relief from this part of the pensions industry as unpicking such schemes would have caused a huge headache”.