Fears for £1m ‘trapped’ in pension scheme
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.