High Court rules PPF can pay compensation to scam victims

The recent High Court ruling on Pension Protection Fund (PPF) compensation could have a “huge impact on pension liberation cases”, Pension Scams Industry Group (PSIG) chair, Margaret Snowdon, has said.

Speaking at The People’s Pensions webinar, Who is protecting my pension?, Snowdon highlighted the case, which was brought by the PPF and Dalriada Trustees in August, as the “first step” in securing compensation for victims of pension liberation scams.

In particular, the case looked to help establish whether or not a particular scheme was an occupational scheme, as only occupational pension schemes are eligible to claim from the PPF Pension Fraud Compensation Fund.

Snowdon explained: “The judgement in the PPF/Dalriada case answered a series of questions which showed that the scheme in question is likely to be an occupational pension scheme, and so essentially becomes eligible for compensation under the fraud compensation fund."

She noted that there has always been a suggestion that schemes involved in pension liberation can’t be an occupational pension scheme, which had a “serious knock on effect” in terms of compensation.

Snowdon added: “One of the points to come out is it is the scheme that is eligible for compensation and that compensation would go to the scheme, in other words the scam scheme, not to the members.

"But the scam scheme as an occupational scheme would then pay the benefits out in the normal way.”

“It’s not a slam dunk because as always the devil is in the detail,” she continued, also noting that victims of cash liberation schemes will still be viewed by HMRC as breaching tax rules, and as such HMRC will still “come after them” for that.

“That is why the proposed amendment to give an amnesty to innocent victims is still important,” she added.

Snowdon also clarified that whilst this ruling only effects occupational pension schemes, and therefore won’t affect the”90 per cent of scams which are in personal pension schemes”, it does represent “a start”.

Commenting on the judgement, a spokesperson for the PPF, added: "The court has given us clarity on the core principles that apply when considering eligibility for the Fraud Compensation Fund and the amount of compensation payable from it to members of scam pension schemes.

“We’ll now work with the trustees of this scheme and trustees of other similar schemes to process the applications which were waiting for the court’s decision."

The PPF revealed in its most recent Annual Reports and Accounts, published October 2020, that it had received seven applications with an estimated total claim value of £43.6m.

Speaking to Pensions Age, the PPF confirmed that the FCF levy for 2020/21 is unchanged at 25p per member, the same rate as in previous years, and that it is considering with DWP what happens in future years.

It also confirmed that the FCF has previously paid out compensation totalling approximately £5.4m in respect of 14 claims since it was established.

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