Source · Select Committees · Work and Pensions Committee
Recommendation 36
36
Paragraph: 144
Members of schemes where professional trustees are appointed can face long waits to receive any...
Recommendation
Members of schemes where professional trustees are appointed can face long waits to receive any recovered assets, even if a significant proportion of the assets are recovered. Often because of the costs associated with providing communications to members, which are met directly from the recovered assets, scam victims perceive communication from professional trustees as poor. We acknowledge that professional fees in this market face a trade-off and that better communication inevitably results in higher fees. We recommend that the Pensions Regulator should explore the case and make a recommendation to DWP for allowing members to more easily transfer out of a scheme where a professional trustee has been appointed before all of the assets are recovered, if this would be in the member’s interest.
Paragraph Reference:
144
Government Response
Not Addressed
HM Government
Not Addressed
Pension scams are devastating, and we understand how disappointing it must be for victims to find independent trustee charges have reduced the amount that can be returned to them further. However, in most cases, by the time an IT has been appointed, the majority of a scam scheme’s funds have already been dissipated. This means, while a member may have paperwork showing what their pension investment is worth, it cannot be transferred out if there are no funds and in those limited cases where an individual victim may have recently transferred funds which remain in the scheme bank account, trust law would require these funds to be treated as part of the overall scheme assets, and not earmarked in a way which would allow them to be returned intact to that victim. It may not be in a member’s best interest to transfer out of the scheme before attempts to recover assets have been allowed to conclude. Savers who leave the scheme early might miss out on the benefit of work to recover stolen funds or attempts to minimise the impact of tax liabilities on those transferring out. Without knowing the final recovery amount, it would be impossible for the IT to make a reasonable judgement about what is in a member’s interest. The IT could be put in the impossible position of being forced to weigh the benefit of allowing a member to leave a scheme early versus the impact that would have on the schemes’ remaining members. As such, this recommendation would be very difficult to put into practice. An IT’s investigation is crucial in recovering as much value as possible for victims, but the cost and complexity of the work is high.