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Pensions regulator shuts down £134m liberation schemes

The Pensions Regulator has put a stop to five connected pension liberation schemes that received transfers totalling more than £134m from over 1,400 individuals.

Following an investigation, the regulator commenced High Court proceedings in July 2013 against A Admin Ltd, Warwick Pensions Administration Ltd, Lincoln Pensions Administration Ltd, Baxendale Walker LLP, and Paul Baxendale-Walker.

The regulator was concerned the schemes were established with the main purpose of providing a cash payment to the member rather than providing retirement benefits, and that this constituted misuse or misappropriation of pension scheme monies and pension liberation.

The schemes operated according to complex arrangements that purportedly enabled funds to be “lent” to the member via a company under the member’s control, which would become their employer under one of the schemes. The member could then use the money as they wished.

The schemes sought to allow members to access their pension funds as cash through a supposed legal “loophole”. In May 2014, the High Court ruled that this supposed gap in the law did not exist, finding in the regulator’s favour on three preliminary legal issues.

The defendants – who had previously provided undertakings to the court not to operate the schemes until a full trial of the regulator’s claim had taken place – have signed a legally binding agreement confirming that:

  • The five schemes are wound up.
  • The relevant defendants no longer act as trustees of the schemes.
  • The schemes are not able to accept transfers from any other pension schemes.
  • The regulator has today issued a report on the case using its powers under Section 89 of the Pensions Act 2004. The report can be viewed here.

The Pensions Regulator executive director Andrew Warwick-Thompson says: “Our action in this case sends a message to anyone operating in this marketplace that we will take action to shut down schemes that pose the greatest risk to members’ pensions, and which may, as a result, undermine confidence in the pensions system generally.

“This was one of the biggest, most highly-organised pension ‘liberation’ exercises we’ve seen. It spread quickly as a result of marketing by a network of introducers who attracted individuals by direct marketing including cold-calling. Fees of 11% – totalling more than £14.7m – were charged to implement these transfers.

“When challenged in the High Court, the defendants’ strategy was clearly shown to be based on an incorrect interpretation of pensions law. The relevant defendants have now agreed to wind up the schemes, preventing them from being used in similar attempts to attract transfers from members.”

Warwick-Thompson adds: “Those caught up in these schemes may face tax charges, even if they were told that the payments would be free of tax. This would have been the case whether or not we had intervened.  Our aim was to ensure that the schemes were closed before more people were enticed to transfer their pension pots into these schemes. Where members feel they have lost out, these legal proceedings leave the way open for them to take their own legal action.”

Paul Baxendale-Walker, who now runs his own wealth consultancy Weybridge Consultants, said: “What TPR did get was a rather bizarre interim judgment from Mrs Justice Rose that the receiving scheme was not a trust. But that was never in issue.

“TPR admitted in open court that it is not necessary to be a trust, in order to receive a lawful transfer value. So long as it is a registered pension scheme – which TPR admitted it was – that is enough.”

The full TPR report can be viewed here.


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Bethell Codrington 21st November 2014 at 2:51 pm

    Well it is good to see something being done, just keep wondering why these schemes are allowed to set up in the first place. The problem with “self-certification” is that the nefarious can take tens of millions in before the Regulator/HMRC gret around to doing anything.
    Shutting he stable door after the horse has bolted!

  2. I agree Bethell that this is partially due to the move from Approved Schemes to Registered (a.k.a. self-certified) schemes!

    I understand the Pensions Regulator and HMRC have been informed of many other liberation schemes/scams, a number of which are Cyprus based but ably abetted by advisors/introducers in the UK and, if these are found to liberation schemes or scams to swindle savers out of their pension funds, I hope the Pensions Regulator (Andrew Warwick-Thompson or Lesley Titcomb when she takes on the mantle next March) and HMRC will do everything they can to close down such scams and facilitate redress, where appropriate.

    Well done to the Pensions Regulator!!

  3. This report is completely inaccurate. TPR sued and lost and was compelled to withdraw its case in the face of opposition from the pensioners that it claimed it was trying to protect. Warwick-Thompson’s statements are completely defamatory. TPR was warned by solicitors for those whom it wrong sued not to issue such defamatory statements. It has ignored the warning. Legal action will now follow. Money Marketing should consider its position carefully before allowing this defamation to continue to be published.

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