The Pensions Ombudsman has ordered Northumbria Police to reinstate a pension liberation victim’s pension, as it ruled that the authority did not take the necessary steps to prevent the transfer.
Following an investigation the Ombudsman concluded that if the authority had performed its duties correctly, then Mr N, would not have transferred out of the scheme. He had been employed as a police officer for over 14 years and was a member of the Police Pension Scheme, becoming a deferred member in 2012.
Mr N reduced his working hours in March 2013, but was concerned that his pension would not be accessible until he retired at age 60, and he was unsure whether he would remain employed by the authority until that age. Therefore, at the age of 39, he sought advice on the possibility of transferring to another pension provider which would let him access his pension at age 55, and in August 2013, he contacted a company called Pension Transfer UK.
He received a follow up phone call around two weeks later from Viva Costa International, an unregulated introducer of work to independent financial advisers, and was referred to Gerard Associates Limited (Gerard), a firm of financial advisers. The London Quantum Retirement Benefit Scheme (London Quantum) was recommended to Mr N. He subsequently went ahead with transferring his pension from the Police Pension Scheme to London Quantum.
On 15 August 2014, Mr N received confirmation that the transfer payment (£112,077.66) had been made from the scheme to London Quantum. Hi adviser, Gerard, took a fee of nearly £5,000 out of the transfer payment. In 2015, Mr N looked again at the documents that he had been given in 2014, and was concerned to note that he had signed up to a high-risk investment as a sophisticated investor. However, he was unable to obtain satisfactory responses from Gerard or the scheme’s trustee, Dorrixo, about this.
At the same time, in 2015, Dalriada Trustees Limited (Dalriada) was appointed by The Pensions Regulator as an independent trustee to London Quantum. Dorrixo remains a trustee of London Quantum but can no longer exercise any powers in relation to it. Dalriada believes that actions taken by Dorrixo may have been in breach of trust, and members of London Quantum may have suffered a loss as a result.
Mr N initially launched a complaint against his adviser, Gerard, with the Financial Ombudsman Service but as he was not regulated no action could be taken. He then launched a complaint against the scheme through an internal dispute resolution procedure (IDRP), which was not upheld.
Following an oral hearing by the Ombudsman, Mr N’s complaint was upheld. TPO stated that the authority should have refused to implement his transfer to London Quantum, and should firstly have informed Mr N of its serious concerns about London Quantum. TPO made particular reference to the scorpion warning from The Pensions Regulator about pension scams, which schemes should have made members aware of.
“The authority should have made appropriate checks and then informed Mr N of its concerns, including sending him a copy of the scorpion warning. However, Mr N was not sent a copy. Indeed, the authority did not correspond with him in writing or verbally when it received his transfer request, or at any time before it completed the transfer,” the Ombudsman said.
As a result, the Ombudsman has ruled that Northumbria Police reinstate Mr N’s accrued benefits in the Police Pension Scheme. Alternatively, if it is unable to do this by law, then the authority should provide Mr N with the equivalent benefits he would have received if he had remained in the scheme, and pay him £1,000 to reflect the distress and inconvenience he has suffered.
However, if the trustees of London Quantum manage to retrieve some or all of Mr N’s pension fund for his benefit, and provide the authority with satisfactory evidence that has happened, the authority shall be entitled to recover that amount from Mr N.