Regulator appoints trustee to seize control of pension reciprocation accounts

An independent trustee firm appointed by The Pensions Regulator has seized control of the bank accounts of six pension schemes used for pension reciprocation due to concerns that the loans could be legally void.

This week’s Money Marketing reveals Dalriada Trustees has written to around 500 scheme members warning they could be forced to return loans obtained using “maximising pension value arrangements”. MPVAs are used to allow investors to access up to 50 per cent of the value of their pension pot.

It is also trying to gain control of the remaining scheme investments, which are not linked to MPVA payments.

The schemes are Cranborne Star, Grosvenor Parade, Lancaster, Portman, Tallton Place and Woodcroft House.

A Dalriada spokesman says the firm plans to seek clarification in the High Court as to whether MPVAs are void under trust law. If the court rules they are void, members could have to repay any loans received using the arrangements.

The spokesman says: “We have been advised by a leading barrister that there is a strong possibility the MPVA arrangements are void. We warned members immediately because there may have been some who had taken a loan and were planning to use the money.

“There is a very real possibility here that these transactions are void and will have to be returned but that is a matter for the court to clarify.”

Dalriada’s letter to members, seen by Money Marketing, also warns the value of individuals’ pensions is likely to be “significantly less” than the value of funds transferred in, due to the “chargesdeducted by the administrators, payments made to int­roducers and the high cost of resolving uncertainties involved”.

Money Marketing first raised concerns over pension reciprocation plans in May.

Alicante-based Premier Pensions Solutions has been promoting reciprocation plans. Managing director Stephen Ward says: “Those associated with PRPs behind the scenes are vigorously defending themselves against any possible determination by the regulator.

“The PRP legal team are in the course of making detailed representations to TPR as to why its intervention was unnecessary and inappropriate and are, separately, considering all other
legal remedies.”

The Pensions Regulator’s executive director for DC, governance and administration June Mulroy says: “We are unable to comment on any particular schemes. However, we are working with HMRC and the FSA to monitor such activity and stand ready to use our powers to disrupt it if necessary.”