Hughes v Royal London – Changing the goalposts for trustees when considering transfers

The High Court has found in favour of a member requesting a transfer - changing the considerations for trustees dealing with transfer requests.

Requests by members for transfers of their accrued benefits to other pension schemes have, in recent years, left trustees in a difficult position as regards meeting legislative requirements and obligations to the member whilst carrying out proper due diligence in relation to the transferee scheme.

Trustees recognising their fiduciary responsibilities will be reluctant to transfer any monies out of a scheme where there are reasonable concerns the transferee may not be a registered pension scheme, or may potentially be a vehicle for pensions liberation.

Previous determinations by the Pensions Ombudsman have turned on a very specific interpretation of the legislation and the fact that to have and be able to assert a statutory transfer right, a member must be obtaining transfer credits in relation to the transferee scheme which, in turn, require them to have earnings from the employer sponsoring the scheme.

Facts of the case

In this case, Ms Hughes requested a transfer of her accrued benefits under her personal pension plan (PPP) to another scheme. Royal London, the provider of her PPP, refused the transfer on the basis that she did not meet the legislative criteria as she was not an "earner" by reference to the transferee scheme.

After the refusal was decided reasonable by the Ombudsman, Ms Hughes appealed to the High Court who decided in her favour and effectively re-wrote the requirements for a trustee in managing transfers.

The case was heard before Justice Morgan and hinged on the definition of ‘earner’ and ‘transfer credits’.

The Ombudsman's position had been that in order for Ms Hughes to be an ‘earner’ within the accepted definition of ‘transfer credits’ as set out in the Pensions Schemes Act 1993, she had to be an ‘earner’ in relation to the specific scheme into which she wished to transfer accrued rights.

Therefore, since she had not provided evidence that she was such an "earner", Royal London was justified in not allowing the transfer.

However, in the High Court Ms Hughes argued that the definition in the Pensions Schemes Act 1993 should not be restricted such that the member has to be an earner specifically by reference to the transferee scheme. The fact that she fit the definition of being an ‘earner’ generally, by other employment, was sufficient.

The decision

This decision confirms that a literal approach should be taken when interpreting legislation and that now, even when a trustee has suspicions about the transferee scheme, they may still be under a duty to proceed with a statutory transfer (after informing the member of the risks).

This raises a question as to the extent a trustee can go to in order to protect members requesting transfer.

Trustees should review systems and processes for dealing with transfer requests in light of this important decision.

If you have any questions or would like more information, please contact one of our pensions specialists below.

Author: Samantha Hastie

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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June Crombie

Partner - Head of Pensions (Scotland)

As Head of Pensions in the Scotland office, I bring over 26 years’ experience to my clients to help them to make better decisions and achieve their aims.


Colin Greig


I have extensive experience of providing clear, practical advice to employers, trustees of pension arrangements, institutions and individuals on a wide range of pensions issues.

Tim Green

Partner - Head of Pensions

I am a Partner in the Pensions team with a broad advisory, transactional and dispute resolution practice.