The Pensions Ombudsman (TPO) has ruled Enfield Council cannot withhold pension benefits for a man who embezzled nearly £500,000, due to the Local Government Pension Scheme (LGPS) rules.

Mr A, who was previously head of finance for the council, paid £448,207 across 104 payments to his personal bank accounts between June 2008 and 2010. He then deleted his bank account details from the council’s system in a bid to cover his tracks.

TPO gave the council three months to reassess its method to recover Mr A’s debt or it would have to allow Mr A to access his pension rights.
Rosalind Connor commented that private sector schemes sometimes have an opportunity to do what Enfield Council were trying to do, due to section 91 of the Pensions Act 1995.

Under this legislation, pension funds are untouchable in cases of debt, but there is an exemption where there have been “criminal, negligent or fraudulent” acts against an employer. However, this rule also relies on the construction of a scheme’s rules.

She added further, “The ombudmsan must be right here, but it is a good reminder of the right under a lot of schemes to recover money from a member’s benefit if the member has caused the employer a loss.

“Particularly in fraud cases, it can be easy to sue the errant employee, but quite hard to recover the money – which has often been spent – so the pensions pot is a good source to recover losses from criminal activity.”

Read the full article in Professional Pensions here.