Pensions - Articles - Pension scam victims receive compensation in GBP80m payout

 The Pensions Regulator (TPR), the Fraud Compensation Fund (FCF), The Pensions Ombudsman (TPO) and Dalriada Trustees have today (19 August) announced that a total £81.5 million in compensation has been paid to 58 pension schemes whose members were defrauded by scammers.

 More payments are to follow for other victims as a result of the joint-agency initiative, which follows a High Court ruling in 2020 clarifying that occupational pension schemes set up as part of a scam could potentially be eligible for FCF compensation.

 Those compensated include victims of the Friendly Pensions Ltd fraud, which saw Susan Dalton and Alan Barratt convicted and jailed in 2022 following a prosecution by TPR for their part in the criminal enterprise that stole £13.7 million. Stephen Grimes was one of the 245 victims defrauded after they were persuaded to transfer their pension savings into fraudulent pension schemes.

 Stephen lost two pension pots worth £27,000 to the fraudsters, but following the compensation award, is now able to access his pension savings. “The scam put my family through turmoil, affecting our livelihoods and all our future plans. We had to raid our other pension pots to pay our mortgage. I have recently needed to step back and work less, so receiving the compensation has helped immensely."

 Stephen warns others to protect their pensions: “I urge others to be on their guard against scammers. Don’t accept cold calls and watch out for bogus cash incentives.”

 TPR and its Pension Scams Action Group partners are working more closely than ever to detect emerging threats and take determined action to prevent harm to savers.

 Mr Rasmussen added: “We urge the pensions industry to be vigilant and report any suspicions to Action Fraud. Every report counts, providing the intelligence we need to stop fraudsters in their tracks.”

 More victims may be eligible

 Sara Protheroe, Chief Customer Officer at the Fraud Compensation Fund, said: "For these members, losing their pension savings due to the dishonest actions of those they put their trust in will have been a deeply distressing experience and the journey to securing redress can be a very long and complex one. So we’re really pleased that members of these schemes will now be able to access their pension savings, following the payment of FCF compensation and securing of benefits. We trust this news will bring comfort to members of these schemes and provide assurance that we are making progress on current claims. However, we suspect there may still be members of schemes eligible for FCF compensation that haven’t yet come forward. We encourage these members to get in touch so we can help determine if they are entitled to compensation.

 “Anyone who wants to check if their pension scheme is being considered for compensation can do so on the FCF website and find the appropriate trustee’s contact details. If it is not listed on the FCF website but they believe it may be eligible, they should contact the FCF directly for advice and support.”

 Dominic Harris, Pensions Ombudsman, said: “I am pleased we have been able to supply information from our investigations, and work closely with our partners, to help smooth the path to redress through the FCF for the members. A lifetime of savings can be stolen in an instant, and I have seen the devastating impact of pensions dishonesty on the members who have brought us their complaints. Intelligence sharing across the pension industry should remain a priority to reduce the harm committed by pension fraudsters.”

 High Court ruling paves the way
 The High Court ruling in November 2020 paving the way for compensation was secured by Dalriada Trustees, a firm of professional trustees who were appointed by TPR to manage these particular defrauded schemes.

 Over the past year, following compensation payments from the FCF, Dalriada has secured pension benefits totalling £81.5 million for members of the affected pension schemes. This means the 2,016 members affected will now have access to their pensions via a secure pension scheme.

 Adrian Kennett, Managing Director of Dalriada Trustees, said: “This is potentially life-changing for people defrauded out of their pension savings who have faced uncertainty for a number of years. We are pleased to have been involved in securing this outcome for the members of these schemes, who now have access to their pensions. Additionally, death benefits totalling £1.5 million have been paid.

 Other professional trustee firms appointed by TPR to pension schemes with scam characteristics are also similarly pursuing claims through the FCF.

 Case study: Stephen Grimes
 Stephen Grimes lost £27,000 after he was persuaded into transferring two pension pots into a scam pension scheme in 2013. He was targeted by a caller who promised him a £4000 cash incentive and a higher return on his savings.

 “Everything seemed above board,” said Stephen, from Exeter, who was a business development manager at the time. "I dealt with their administration team, and all the letters, booklets and information looked professional. I even chose a ‘mid-risk investment’ option and was kept in the loop right up until my money was transferred. I thought I was foolproof.”

 Stephen found out things were not right when he received a letter saying The Pensions Regulator (TPR) had appointed professional trustees to take over his pension scheme, as there were concerns it may have been used as a vehicle for ‘a pensions liberation scam’.

 TPR was investigating and took regulatory, civil and criminal proceedings to prevent further harm to members, bring the fraudsters to justice and secure restitution of their savings. TPR prosecuted fraudsters Susan Dalton and Alan Barrett, who had to be extradited from Spain. In April 2022, they were convicted and jailed for a total of 10 years between them.

 Stephen is now able to access his pension savings, following the compensation award.

 “It has been a very enduring time and I can only say how much I appreciate all of the hard-work it has taken to arrive with this very positive outcome.

 “It had taken 12 years to build up those pensions so losing that £27,000 had a devastating impact. The scam put my family through turmoil, affecting our livelihoods and all our future plans. My wife and I had to raid other pension pots to pay our mortgage.”

 “As I have recently had to take a step back and work less, receiving the compensation has helped immensely.”

 “I urge others to be on their guard against scammers. Don’t accept cold calls and watch out for bogus cash incentives.” 

 Read the full case report on the Friendly Pensions Ltd fraud prosecution.

 
 The Fraud Compensation Fund is run by the Board of the Pension Protection Fund and pays compensation to eligible occupational pension schemes which have lost out financially due to dishonesty, and where the scheme employers are insolvent.
 The compensation from the FCF covers the financial loss from the pension schemes due to dishonesty, as well as the costs needed to investigate and progress the cases.
 Pension schemes being considered for compensation, along with their current status, are listed on the FCF website.
 Following the High Court ruling in November 2020 Dalriada Trustees appointed a new pension scheme for members receiving restorative compensation from the FCF.
 The overall £83 million total includes the compensation the FCF paid in August 2024 to three pension schemes whose members’ pension savings were lost after being unlawfully invested in Norton Motorcycles Holdings Ltd, which was the business of the former sole trustee of the three schemes.
 The Pension Scams Action Group, led by TPR, brings together partners from law enforcement, the pensions industry, the government and other agencies to tackle pension fraud and prevent savers falling victim. The multi-agency group shares intelligence and collaborates closely to monitor the scams threat landscape and take decisive and, where appropriate, robust action to disrupt emerging threats and protect savers.
 The Pensions Regulator is the regulator of work-based pension schemes in the UK. It protects savers’ money, helps to enhance the pensions market and supports innovation in the interests of savers. Their statutory objectives are to:
 protect members' benefits
 reduce the risk of calls on the Pension Protection Fund
 promote, and improve understanding of, the good administration of work-based pension schemes
 maximise employer compliance with automatic enrolment duties
 minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator's functions under Part 3 of the Pensions Act 2004 only)
 The Pensions Ombudsman is an independent organisation set up by law to deal with complaints about occupational and personal pensions. It combines in one organisation the Pensions Ombudsman and the Pension Protection Fund Ombudsman. TPO acts impartially and its service is free at the point of delivery.
 Dalriada Trustees Limited is a professional trustee which has operated since 2003.