Regulator seeks judicial guidance on pension liberation A High Court case is to examine the extent of the Pensions Regulator's powers to deal with "pensions liberation" whereby individuals are encouraged to gain early access to their pension but are often hit by large tax charges. A High Court judge is being asked by two independent pension trustees and the Pensions Regulator to determine whether a number of pension schemes can be classed as occupational pension schemes in a case that will help to clarify the regulator's legal powers. The case is linked to arrests in May by City of London police relating to several pension vehicles suspected to be linked to pensions liberation. Two pension fund trustees, Dalriada and Pi Consulting, were subsequently appointed as independent trustees of the pension schemes to assume responsibility for the day-to-day management. The Pensions Regulator has powers to appoint independent trustees to secure pension scheme assets if a scheme is classified as an occupational pension scheme. However, if a scheme is deemed not to be an occupational pension scheme, the Pensions Regulator can use other legal powers granted to it by parliament. In written arguments to the court, the Pensions Regulator said: "There is no perfect solution to the problem of dealing with liberation vehicles on the current state of the legislation." Jonathan Evans, barrister acting for Pi, told a High Court hearing that pensions liberation was generally regarded as a "bad thing." "The reason is it leads members to be much worse off than if they had left their benefits where they were," he told the court. He added that such schemes often had a "very, very substantial tax charge," huge fees and often were invested in a "highly risky, inappropriate way." In its written legal arguments submitted to the court, the regulator said the schemes involved in the case should not be classed as occupational pension schemes. The Pensions Regulator said that, if the judge were to rule in its favour, this would have "the significant advantage of avoiding legitimising these schemes as genuine OPS." The ultimate aim of the Pensions Regulator is understandably to minimise future transfers into and establishment of such vehicles, and marking out vehicles with these features as not being OPS will assist significantly in this task. Dalriada and Pi initially adopted a neutral stance on the issue but were appointed by the court to make the argument that the schemes are occupational pension schemes. Dalriada said in its written arguments that there was "nothing inherently criminal or illegal about pensions liberation." It was just "very tax inefficient." However, it said, pension fund members were often lied to about tax consequences, and told there was a "loophole" or some equivalent because it was a loan. Ben Fairhead, a senior associate at law firm Pinsent Masons, which is acting on behalf of Dalriada, said: "These proceedings are unusual in that the parties involved are not in dispute. They are simply ensuring that the interests of all parties are represented in the forthcoming hearing.  He added that, if the schemes were found not to be occupational pension schemes, the strict rules governing registration of pension schemes may mean the mere transfer of someone's pension fund from a "legitimate" scheme to a liberation vehicle could amount to pension liberation and lead to a large tax charge.