Fears for £1m ‘trapped’ in pen­sion scheme

The Daily Telegraph - Your Money - - YOUR MONEY -

As many as 60 savers are con­cerned that they may never get their money out of the firm. Sam Brod­beck in­ves­ti­gates

Fears are grow­ing over the safety of pen­sions worth around £1m held in a scheme that is re­fus­ing to give cus­tomers ac­cess to their money. The Pen­sion Om­buds­man, which rules on com­plaints re­lat­ing to work­place pen­sions, has up­held 18 com­plaints against the firm, Fast Pen­sions, in the past two years.

Al­most all the cases in­volve in­vestors who have be­come alarmed after they stopped re­ceiv­ing an­nual state­ments and found it im­pos­si­ble to get in­for­ma­tion on their sav­ings.

Of the cases where the om­buds­man has sided with savers and pub­lished de­tails, 18 peo­ple have in­vested around £960,000 in schemes run by the firm. How­ever,

Angie Brooks of Pen­sion Life, a group that rep­re­sents peo­ple in dis­putes over their pen­sions for an an­nual fee, said she was cur­rently help­ing 60 peo­ple with pen­sions ad­min­is­tered by Fast Pen­sions. If their cases are sim­i­lar to the first group of com­plainants, al­most £3m could be in­volved.

Tele­graph Money un­der­stands that an in­ves­ti­ga­tion has been launched by the Pen­sions Reg­u­la­tor, which, un­like the om­buds­man, has the power to appoint in­de­pen­dent trustees to take con­trol of a pen­sion fund.

A spokesman for Cheshire Po­lice, which is in­volved be­cause Fast Pen­sions once had busi­ness premises in the area, con­firmed that “of­fi­cers are in­ves­ti­gat­ing re­ports of sus­pected fraud­u­lent ac­tiv­ity in­volv­ing a pen­sions com­pany”.

One reader said she feared that her £65,000 in­vest­ment could be lost for good. After a 20-year ca­reer in the me­dia, the reader, who wished to re­main anony­mous, de­cided that it would be sen­si­ble to con­sol­i­date var­i­ous pen­sion pots into one place. In 2012, a fi­nan­cial ad­viser rec­om­mended that she move her com­bined as­sets of £65,000 to Fast Pen­sions.

“He de­scribed their scheme as a ‘low-risk pen­sion in­vest­ment op­tion’ that would per­form nicely over the next few years,” she said. “He would do all the work, all I had to do was sign the forms. It all looked kosher and sounded straight­for­ward.”

She re­ceived state­ments ev­ery year un­til 2016, when alarm bells be­gan to ring. “I tried call­ing and email­ing Fast Pen­sions. But my emails were unan­swered and a recorded phone mes­sage ba­si­cally said they weren’t tak­ing calls,” she said.

“When I tried con­tact­ing the ad­viser who orig­i­nally put my money into Fast Pen­sions, his mo­bile and email had stopped work­ing.

“The up­shot is that I’ve spent the past 12 months try­ing to get an­swers and to trans­fer my money, if it still ex­ists, to an­other provider.”

The om­buds­man up­held her com­plaint and in­structed Fast Pen­sions to pro­vide a “full an­swer” to her ques­tions about her pen­sion, to help her trans­fer to an­other scheme that would agree to ac­cept the as­sets and to pay £2,000 in com­pen­sa­tion.

But Fast Pen­sions has failed to meet the dead­lines set by the om­buds­man and the reader has re­signed her­self to start­ing sav­ing for her pen­sion afresh. Hav­ing just turned 50, how­ever, she said she might never save enough to be able to re­tire fully.

Her case is typ­i­cal of those up­held by the om­buds­man against Fast Pen­sions, of­ten re­lated to woe­ful ad­min­is­tra­tion. They are fur­ther com­pli­cated be­cause mem­bers’ pen­sions ap­pear to have been in­vested in highly un­usual as­sets, namely five-year loans to pri­vate com­pa­nies. While main­stream pen­sion providers will ac­cept trans­fers of cer­tain as­sets “in specie” – a di­rect trans­fer of as­sets as op­posed to re­quir­ing them to be turned into cash first – loans to un­listed firms are of­ten re­jected.

When Fast Pen­sions has replied to in­vestors, it has de­manded enor­mous “exit fees” of up to 40pc of the value of the pen­sion to trans­fer be­fore the end of the term. From Oc­to­ber, exit There is a baf­fling ar­ray of or­gan­i­sa­tions when it comes to com­plain­ing about pen­sions.

If you sus­pect fraud you should im­me­di­ately no­tify Ac­tion Fraud.

The Pen­sions Reg­u­la­tor can appoint in­de­pen­dent trustees if it has se­ri­ous con­cerns over the peo­ple run­ning the scheme.

The Pen­sion Om­buds­man han­dles com­plaints about pen­sion firms, al­though you must first have gone through the firm’s com­plaints sys­tem. This om­buds­man looks at dis­putes re­lat­ing to per­sonal and oc­cu­pa­tional schemes, nor­mally with trustees, reg­u­lated by the Pen­sions Reg­u­la­tor.

For dis­putes with “con­tract­based” pen­sions – those not run by trustees – the Fi­nan­cial Om­buds­man Ser­vice should be used. penal­ties on schemes with trustees must be capped at 1pc for peo­ple over 55 who want to move or cash in their pen­sion.

In an­other wor­ry­ing case, the om­buds­man or­dered Fast Pen­sions to pay out £79,000 held in a de­ceased mem­ber’s pen­sion to his widow. The firm told the woman, iden­ti­fied only as “Mrs K”, that death caused by al­co­hol ad­dic­tion was ex­cluded un­der the terms of its in­sur­ance pol­icy. Two years after her hus­band’s death Mrs K still had not re­ceived his pen­sion and had fallen into mort­gage ar­rears.

Sara Moat, a di­rec­tor of Fast Pen­sions, said: “All clients agree to medium-term in­vest­ments be­tween five and 10 years. All con­tracts are still within their in­vest­ment pe­riod.

“The scheme rules for our clients state that they have to com­plete the in­vest­ment pe­riod be­fore they can trans­fer and that if they do have ac­cep­tance from the trustee to trans­fer early, penal­ties will ap­ply. “lib­er­ate” pen­sions, which nor­mally can­not be ac­cessed un­der the age of 55.

Fraud­sters con­vince savers to trans­fer their pen­sion to a new scheme from which money can be re­leased, they claim, without in­cur­ring huge tax bills.

Once out of the over­sight of a le­git­i­mate scheme, rogue ad­vis­ers typ­i­cally rec­om­mend es­o­teric in­vest­ments in “illiq­uid” and high­risk as­sets such as ho­tel rooms, car parks and stor­age “pods”. In many cases pen­sions are lost en­tirely.

The “pen­sion free­doms”, which al­low over-55s to cash in their en­tire pot, have led to a surge in pen­sion fraud cases.

In the months im­me­di­ately fol­low­ing the in­tro­duc­tion of the re­forms in April 2015, vic­tims re­ported losses to­talling £4m a month.

This year 24 vic­tims re­ported losses of nearly £9m in March alone, ac­cord­ing to the City of Lon­don Po­lice.

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