A pension liberation scheme has been ordered to repay a retirement saver almost £370,000 plus interest for ignoring his requests to return his money.
In the first pension liberation ruling, The Pensions Ombudsman upheld a complaint from an unidentified saver who transferred his retirement savings from a National Health Service pension in Scotland to the Capita Oka Pension Scheme.
Capita Oka took a £18,500 fee for managing the transfer and promised investment returns of up to 12% a year.
The money was transferred, but the saver changed his mind and asked the firm to transfer the fund out of their scheme.
Capita Oka failed to respond, so the saver complained to the ombudsman.
Ombudsman upholds complaint
The complaint was upheld and Imperial Trustee Services Limited, the trustees of the Capita Oka failed to contact the ombudsman, although an accountant in Kent did offer an explanation for the pension scheme not repaying the saver.
Downs & Co, based in Bromley, Kent, told the ombudsman they were instructed by a Mr Payne, the sole director of Imperial Trustee Services Limited to investigate the Capita Oka scheme.
The firm told the ombudsman that around £9.8 million in transferred pension funds was invested in a storage firm called Store First Limited and that no cash was available to repay the £370,000.
The ombudsman has warned the retirement saver that he may never get his money back as some or all may have disappeared.
The ombudsman is reportedly considering around 80 pension liberation cases, and Capita Oka is the first of the determinations.
Pension liberation, or pension unlocking, is generally when someone transfers their retirement savings from a pension scheme to another because they want to access their money before the minimum retirement age of 55 years old.
£134 million scams
Although not illegal, drawing on funds against pension rules does come with a tax charge of at least 55% of the transferred fund.
However, some pension liberation schemes have been fronts for fraudsters who have simply made off with someone’s life savings.
Meanwhile, The Pensions Regulator interim chief executive Stephen Soper has revealed pension liberation firms are luring savers with scams based on the new Budget freedoms.
“I am not ready to say exactly what these scams are as we are working to identify and close them down at the moment, “he said.
“We have successfully shut some pension liberation scams involving around £134 million of retirement savings transferred out of genuine schemes.”
