Watchdogs Close £14m Pension Liberation Network

Financial watchdogs have revealed the details of a suspected pension liberation scheme that has cost savers almost £14 million in retirement cash.

The Pensions Regulator (TPR) took action in April to take control of 18 pension schemes after ruling three trustees – Alan Barratt, Susan Dalton and Julian Hanson – acting on instructions from David Austin, had misappropriated scheme funds and exercised poor trustee governance.

Austin is said to be a shadow trustee controlling a number of pension funds.

“It’s reasonable to infer a scam involving £13.7 million was going on,” said a TPR spokesman.

The TPR explained money transferred to the schemes by 242 investors had disappeared as exorbitant fees and commissions.

A 21-page report by TPR lists the details of all the schemes involved.

Alleged breach of trust

Independent trustees were appointed to try to recoup lost monies, but only £400,000 has been recovered to date.

The decision to call in the outside trustees was made in April, but the TPR has only just made the matter public.

The detailed report accuses the three trustees and Austin of breaching trust by allowing the misuse of funds under their control to encourage retirement savers to transfer funds from other pensions into their schemes.

TPR executive director Andrew Warwick-Thompson said the way the alleged pension liberation scheme worked included ‘all the hallmarks of fraud’.

“This is a complicated case and shows why retirement savers should be careful about promises they are made that are likely to be scams,” he said.

Tax penalties

“Pension liberation schemes can have a devastating effect on people’s lives, not just their finances.

“My message to anyone cold-called with offers of unlocking money in a pension fund or unrealistic high investment returns should just put the phone down.

“The likely outcome is savers will lose their money and still face paying tax on the missing money.”

HM Revenue & Customs (HMRC) treats drawing money from a pension fund before a saver is 55 years old as an unauthorised withdrawal and sets a tax penalty starting at 55% of the amount of money transferred into a liberation scheme.

TPR warned that pension liberation schemes often start with a cold-call by telephone, text or email.

So-called financial advisers then promise early access to cash, risky high return investments often offshore and urge speedy money transfers to beat limited time offers.