Schemes will now find it extremely difficult to prevent pension transfers to any registered pension scheme, regardless of whether they think it is a potential scam - and Equiniti, the UK's largest pension scheme administrator, is warning that this leaves the gates wide open for criminals.
Pension liberation schemes allow savers to access their cash before reaching the age of retirement. However, they can put members' savings at risk, and often incur heavy tax penalties.
In the case of Hughes v. Royal London, saver Donna-Marie Hughes asked to move £9,000 to a new scheme. Royal London refused, worried about the legitimacy of the scheme. The Pensions Ombudsman ruled in favour of Royal London - but this decision has now been successfully appealed.
As a result it has potentially made it easier for unwary pension members to fall prey to criminal pension scammers, says Peter Scott, head of pension regulation and compliance at Equiniti Pension Solutions, the UK's largest pension scheme administrator.
"In our view, the High Court's decision has deprived the industry of a valuable tool in the fight against pension scamming and has further stretched the meaning of an occupational pension scheme."
He is calling for fundamental changes to legislation.
Last year, the Financial Conduct Authority (FCA) put out a warning to savers to beware of scammers, advising them to avoid cold-callers and always use a legitimate financial adviser. But many people are still falling victim to such schemes, with research from MetLife revealing that almost one in ten pensioners has been targeted by fraudsters.
"Barring a change to the law – which would be far from straightforward - or more decisive action being taken by government agencies to clamp down on suspicious schemes and the perpetrators, all the pensions industry can do for the moment is continue to warn the public," says pensions litigation expert Ben Fairhead of Pinsent Masons, the lead legal adviser to Royal London.
"Inevitably, in the meantime, scope very much remains for unscrupulous individuals to target and exploit those desperate for cash or enticed by the prospect of implausibly high returns on investments."