Illegal pension reciprocation plans

Earlier this year we published a blog about pension reciprocation plans, labelling them as a ‘dangerous’ pension scheme.

This followed the receipt of several emails from firms offering early access to pension funds.

These ‘pension reciprocation plans’ claimed to be able to offer access to 50% of the value of pension funds, even to those younger than the minimum benefit age of 55.

We were immediately suspicious about these schemes and sounded a warning in our blog. The Financial Services Authority (FSA) later provided a similar warning to consumers not to get involved.

The Pensions Regulator subsequently appointed an independent trustee to seize control of the bank accounts of six schemes used for these pension reciprocation plans.

Today we have seen a High Court ruling confirming that such arrangements are illegal.

We understand that around 400 pension scheme members got involved with these illegal pension reciprocation plans.

It will be interesting to see how this all unravels following the High Court ruling and whether any financial advisers were foolish enough to recommend these clearly dodgy arrangements to their clients.

Photo credit: Flickr/Eric The Fish (2011)