The Daily Telegraph - Saturday - Money
Thousands blocked from drawing funds after pension provider collapses
Keith and Geraldine Pengelly were about to take a £18,000 lump sum from Geraldine’s pension to pay for building work on their kitchen, when out of the blue their pension administrator told them it was restricting their withdrawals to just £1,000 a month.
“All of a sudden, we were blocked from our account. In this day and age, it’s an outrage,” said Mr Pengelly.
The building work was close to completion, but suddenly they had no way of paying the tradesmen.
Mr Pengelly was forced to max out his credit cards and reach out to family for financial help. Even then, he was still thousands of pounds short.
Mrs Pengelly’s pension is tied up in a Small Self Administered Scheme (SSAS) administered by Hartley Pensions. Also a Self-Invested Personal Pension (Sipp) operator, Hartley went into administration in August 2022.
There are 17,000 savers with investments in Hartley, all of whom were hit with the £1,000 a month limit, right in the middle of a cost of living crisis. Thousands may have been in regular drawdown and reliant on that income just to get by.
After The Daily Telegraph contacted
Hartley’s administrator, UHY Hacker Young, it removed the restriction on monthly withdrawals. The accountancy firm said that the reason it limited payments was in order to calculate an “exit and administration charge” that will be levied against the savers.
The administrators are currently preparing a court application for an exit and administration charge to be approved, according to a letter seen by The Telegraph.
If approved, this could see money taken from clients’ pension pots to foot the administration bill.
It is looking to recoup about £11m in both administration and legal fees, according to a report published on the liquidation in February. One Hartley client, aged 68, who did not want to be named, said he was worried money would be taken from his pension to fund the administration costs.
The client said the temporary restriction on drawdowns to £1,000 a per month was “well below” his financial requirements.
Peter Kubik, of UHY Hacker Young, said: “By restricting the drawdown we were hoping to restrict the continuous recalculation while still allowing clients sufficient funds to be able to pay their ongoing costs. This restriction has been removed.”
Mr and Mrs Pengelly have now received the money into their account. But this is far from the end of their troubles, as they remain trapped in these pension schemes until they can be transferred to a different operator.
The administration process by UHY Hacker Young is taking longer and costing more than planned.
The accountancy firm said it expects it will take at least 12 months before it has transferred out all client Sipps. The legal fees and expenses were originally £ 2.5m but this has been revised up to £6m, according to its latest report.