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Regulator in £19m ‘pension liberation’ High Court battle

The Pensions Regulator is embroiled in another High Court battle after it ordered an independent trustee to seize control of two schemes allegedly involved in ‘pension liberation’.

The case involves the trustees of two pension funds, the Pennines scheme and the Mendip scheme, into which 476 people transferred £19m from other occupational schemes between October 2011 and March 2012.

Three investment firms, Hedge Capital Investments Ltd, Hedge Capital Investment Group Plc and Hedge Capital Ltd – are accused of helping facilitate pension liberation for the two schemes.

According to court documents, the schemes allowed members to access a loan based on the size of the lump sum they would be entitled to when they reach retirement. The loans attracted a monthly interest rate of 5 per cent.

Around £6.5m of loans have been made to members of the two schemes since October last year.

On 28 March, TPR appointed independent trustee firm Dalriada Trustees as trustee of both the Pennines and Mendip pension schemes. On April 2, Dalriada made a freezing order against the defendants limited to the sum of £12m.

The defendants had requested a summary dismissal of the case, which has been rejected by the Chancellor of the High Court.

It is the second time the regulator has taken a case agains schemes allegedly attempting to allow people to access some of their pension early to the High Court.

In June last year, Money Marketing revealed TPR had appointed Dalriada to seize control of the bank accounts of six schemes used for pension reciprocation due to concerns the loans could be legally void.

The following month a High Court judge froze over £1m of fees charged to members of pension reciprocation plans administered by Ark Business Consulting and two related entities.

In December, the High Court ruled the arrangements are illegal.

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