Source · Select Committees · Work and Pensions Committee
Recommendation 36
36
Rejected
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.
Government response summary AI-generated
The government rejects the recommendation, explaining that funds are often already dissipated, trust law prevents earmarking, and transferring out early may not be in a member’s best interest or could negatively impact other members.
Summary of the government's response below — read the verbatim text to verify.
Paragraph Reference:
144
Government Response
Rejected
HM Government · verbatim extract
Rejected
It is unlikely to be in a member’s best interest to transfer out of a scheme before attempts to recover assets have been concluded. Savers who left the scheme early would potentially miss out on an independent trustees (IT) work to recover stolen funds. ITs can also minimise the impact of tax liabilities, which could potentially further reduce the money returned to those transferring out. In many cases, the majority of a scam scheme’s funds are gone before an IT is appointed – meaning there would be little value for an individual member to transfer. We know being the victim of a pension scam is devastating. Equally, we understand how disappointing it must be for savers to find that IT charges have reduced the amount that can be returned to them further. An IT’s investigation is crucial in recovering as much value as possible for victims, but the cost and complexity of these are high. Scam schemes typically have no meaningful administration or financial records. Documentation is often deficient or needs legal input and, sometimes, court direction. Where schemes have been used as a vehicle for pension liberation, there can also be complex tax issues to deal with. Without an IT investigation, it is unclear how stolen funds could be recovered and returned to victims due to the difficulty in matching members with their funds thanks to typically poor recordkeeping present in scam schemes. Responses to the Committee’s Fifth Report of Session 2019–21 21
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