High Court rules in pension "unlocking" test case The High Court has backed the use of emergency powers to intervene in schemes suspected of pension liberation fraud by the workplace pensions regulator. In July, the court was asked to rule on the legal status of pension schemes, following a series of high-profile police raids on companies accused of involvement in pension liberation or unlocking. Under pension liberation, individuals are encouraged by companies to access retirement funds before the minimum retirement age of 55. However, these payments are likely to be in breach of pension scheme rules and can expose members to potentially significant tax charges. At the centre of the High Court's deliberations, widely seen as a test case for the industry, was the use of powers by the pensions regulator to appoint independent trustees to run the suspected liberation schemes. The regulator can only use these powers if the scheme is classed as occupational and the High Court ruled that the scheme was, meaning the regulator's intervention in appointing the trustees, Dalriada, was valid. "We welcome the legal clarity provided by this ruling, which will help inform our wider strategy and enable us to take the appropriate steps to combat activities that could undermine confidence in the pension system," said the Pensions Regulator. We have a suite of powers we can use to disrupt pension liberation fraud including suspending and prohibiting trustees, appointing independent trustees to schemes to protect assets, freezing bank accounts and repatriating monies. The actions that we took in relation to these schemes still stand and the independent trustees put in place by us remain appointed. Katharine Davies, a partner at Pinsent Masons, which put together the legal case on behalf of Dalriada, said the proceedings had been of huge interest to trustees and the wider pensions industry, and the decision helpfully clarifies this important issue While clearly not condoning pension liberation, the court has clearly recognised that the schemes involved are occupational, which by implication affirms the Pensions Regulator's capacity to appoint independent trustees to oversee dubious schemes. It is surprising that it has taken some time for this definition (from the Pension Schemes Act 1993) to be tested. Some 450 members with funds in excess of £15m belong to the schemes suspected of liberation fraud. Pending police investigations, no further contributions or transfers-in are being accepted into the schemes in question, and no payments are being made to, or in respect of, members of the schemes, said the Pensions Regulator.