Partner Anna Rogers comments in Pensions Expert on the Ombudsman’s recent decision to fine ‘reckless’ trustee
The Pensions Ombudsman has held the trustee of a small self-administered pension scheme personally liable for multiple breaches of trust, ordering him to repay to the scheme hundreds of thousands of pounds of missing assets plus £6,000 to each member for distress.
Anna Rogers commented:
“Parts of the Ombudsman’s determination read like a sitcom but it was a sorry pensions liberation tale. The utterly hopeless trustee of the receiving scheme saw it as an opportunity to make ‘a great deal of lolly’.”
“Although the trustee was ordered to repay the transferred amounts to the scheme plus 8% pa interest, and a whopping £6,000 each to the members for distress, there may not be any money to recover.”
Despite Kench’s ignorance of the basics of trusteeship, the Ombudsman treated him as “a quasi-professional trustee”, she added.
“There are two tests for personal liability in case law, with a higher standard expected of a professional trustee, but he would have failed to meet the lay trustee test too, so would not be protected. By contrast, trustees who have genuinely done their best are very well protected.”
“The large amounts of money in pensions and the profound lack of financial awareness have made these cases a blight on the industry. How can it be stopped? It isn’t realistic to expect TPR to stop it. Financial penalties imposed on perpetrators by the Pensions Ombudsman are all very well but they may be too late. Giving transferring trustees power to refuse to pay is a good idea, as is the DWP’s ‘Stronger Nudge’ to Pension Wise/Money Helper. Maybe it’s just too easy to set up pension schemes and what we really need is a requirement for professional trustees. Whatever happened to the “pensioneer trustees” that SSASs had to have before 2006?”
Read Anna’s comments in Pensions Expert.
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