Pension Reciprocation Plan - Is this legal?

Emmamumof2

Take a look at this

http://www.moneymarketing.co.uk/pensions/regulator-appoints-trustee-to-seize-control-of-pension-reciprocation-accounts/1033220.article

Would its control have been "seized" if it was 100%?

http://www.pensionsadvisoryservice.org.uk/news/2011/july/high-court-freezes-pension-reciprocation-scheme-assets

pensionslaw

Hi,

I'm new to the boards so please be gentle.

I wanted to pick up on a couple of points:

1) London & Colonial - [TEXT DELETED BY FORUM TEAM] London & Colonial is a reputable firm, which based itself in Gibraltar to get around the UK's archaic annuity purchase rules (before these were relaxed), not to avoid giving consumers any protection. Their products may still be wholly unsuitable for a given individual, but that's a "know your customer" issue and not a reflection on them.

2) So far as HM Revenue and Customs is concerned, you don't have to be at death's door to legitimately get access to your pension funds before age 55: you just need to meet the "ill-health condition", meaning basically that a doctor certifies you can't continue your occupation due to ill-health, and you have in fact given up your occupation:

"For the purposes of this Part the ill-health condition is met if—(a)the scheme administrator has received evidence from a registered medical practitioner that the member is (and will continue to be) incapable of carrying on the member’s occupation because of physical or mental impairment, and(b)the member has in fact ceased to carry on the member’s occupation." (Finance Act 2004, schedule 28, para 1 - I don't get out much !)

If you were forced to give up your career at any age due to ill health, even if it was many years ago, you can start to take your pension before 55, without involving scammers and without your pension leaving the bounds of reputable UK based pension schemes.

HTH

Tarzan2011

I understand the broker handling the SIPP has no distanced themselves from these transactions, wonder why?

Could it be the commission rebate?

T

Aegis wrote: »

Same scam, different name, by the looks of it.

To put it really simply, unless you are terminally ill, there is no legitimate way to unlock your UK pension before age 55.

dunstonh

Tarzan2011 wrote: »

I understand the broker handling the SIPP has no distanced themselves from these transactions, wonder why?

Could it be the commission rebate?

T

More likely the fact that the Pensions regulator is taking companies to court and getting assets seized and any FSA regulated company found to be involved in such transactions is going to be under intense scrutiny.

Tarzan2011

Yes, you are probably right.

However if I understand it correctly then once the transfer of frozen/deferred benefits is transferred to a SIPP, then the owner of the SIPP can choose to invest the fund themselves in a range of investment products (subject to rules).

The option referred to above seens to saying when you invest (the loan) with the solar company, in return they give you 7% PA.

So in effect the pension fund is invested, while this investment may not be wise as keeping the orignal pension as it was, is the transaction breaking any rules?

In effect there is no drawdown on the pension as the Solar Companys commission rebate is passed to the investor

What is the difference between an investor investing their SIPP fund in the traditional way with a Fund Manager for example, or placing it with the Solar Company. I realise its not stocks and shares and will perform differently but its still an investment, is it because it does not comply with acceptable investment methods within the rules of the SIPP.

Just thinking out aloud really

T

dunstonh wrote: »

More likely the fact that the Pensions regulator is taking companies to court and getting assets seized and any FSA regulated company found to be involved in such transactions is going to be under intense scrutiny.

dunstonh

However if I understand it correctly then once the transfer of frozen/deferred benefits is transferred to a SIPP, then the owner of the SIPP can choose to invest the fund themselves in a range of investment products (subject to rules).

Two issues there.

1 - the FSA consider a transfer of frozen/deferred benefits as a mis-sale unless proven otherwise. Even on non-advice cases. So, virtually all providers now need an IFA to sign off on it first. A scheme that isnt going this is leaving itself wide open to FSA enforcement action.

2 - The trustees of the SIPP are meant to ensure that the assets are acceptable.

Using the 50% for the benefit of the pension is perfectly acceptable. Even if it ends up being an investment that doesn't pay off. The issue is where people are taking the 50% as cash in hand to spend as they wish.

Tarzan2011

Thanks for your reply, please see mu comments below;

dunstonh wrote: »

Two issues there.

1 - the FSA consider a transfer of frozen/deferred benefits as a mis-sale unless proven otherwise. Even on non-advice cases. So, virtually all providers now need an IFA to sign off on it first. A scheme that isnt going this is leaving itself wide open to FSA enforcement action.

yes i see what you mean, so even execution only cases are under scrutiny and the IFA would have a hard time proving that transfer was in best in interests of the investor.

2 - The trustees of the SIPP are meant to ensure that the assets are acceptable.

yes and typically these fit into stocks/shares, investment trusts, fund managers etc and the like but some of the investments are loans to third parties (the solar example in prev post) and with all i believe the IFA has a duty to confirm the commercial aspect, eg what guarantees are in place to ensure repayment of the loan capital and is the stated % growth competitive.

Using the 50% for the benefit of the pension is perfectly acceptable. Even if it ends up being an investment that doesn't pay off. The issue is where people are taking the 50% as cash in hand to spend as they wish.

I agree anybody doing this as a lifestyle choice needs their head examing, there needs to be a good commercial reason for doing so and critically, sufficient investment time for the investment via the SIPP to match or beat the deferred pension subject to the transfer.

.



Cheers

T

Phil72

It seems I have to be careful what I say now as I have been warned by MSE that the people behind pensionbackedloans.co.uk [TEXT DELETED BY FORUM TEAM] have had their solicitors in Bournemouth contact MSE trying to get hold of my personal details so they can take me to court for defamation!

So rather than risk adding to the alleged defamation I shall simply quote the latest update courtesy of the Financial Times, [TEXT DELETED BY FORUM TEAM] I am allowed to do that right legal eagles? Its the Financial Times nasty words not mine!

Source: Charlie Thomas Financial Times, 26 August

Nearly 500 UK scheme members could be forced to repay long-term loans as soon as this autumn, if the High Court establishes their schemes are void.



The six schemes in question utilise pension reciprocation plans (PRP), a method that sees members borrow up to 50% of the value of another scheme’s member’s pension as arrangement, usually repaid with interest over 20-30 years.


But earlier this year, the Pensions Regulator appointed Dalriada Trustees to take control of these schemes, previously administered by Ark Business Consulting and its associated companies, after becoming concerned about the status of these arrangements.
Dalriada Trustees then chose McGrigors law firm to bring the clarifications before the High Court last month. Katharine Davies, partner at the firm, told PM if the court finds the schemes to be invalid, the 450-plus members will find themselves asked to pay back money taken out through the PRP.


“If it’s the case that these arrangements are void, they could be unwound and the money will be required to be paid back to the schemes,” said Davies. “The message to trustees is they should proceed with caution when it comes to this sort of arrangement.”
The six schemes are Cranborne Star Pension Scheme, Grosvenor Parade Pension Scheme, Tallton Place Pension Scheme, The Lancaster Pension Scheme, The Portman Pension Scheme and Woodcroft House Pension Scheme.

dunstonh

It seems I have to be careful what I say now as I have been warned by MSE that the people behind pensionbackedloans.co.uk [TEXT DELETED BY FORUM TEAM] have had their solicitors in Bournemouth contact MSE trying to get hold of my personal details so they can take me to court for defamation!

Some of us have had that before. I had Cartel threaten me before they went into administration and took 30 million pounds of consumer money with them. Rockingham threatened me before they got into trouble with the FSA (who basically confirmed everything that was said on this forum about them was right). I have had another firm in the last week contact the board asking for my details for much the same reasons.

Best thing to do is use links to articles that back up your posts and where you cant do that, then dont aim the comment at a particular firm but keep it generic.

Phil72

Theres a new moneymarketing article on this put out this morning, I cant post links yet, but if you google any of the content quoted below you will find it

According to Money Marketing, surprise surprise the property "investments" had "no realisable value". A real shocker that! Who could have guessed it! full article quoted below.

Pension reciprocation clients facing "significant" losses

14 October 2011 8:53 am By Tom Selby


Dalriada Trustees has warned investors who tried to unlock their pension fund early through pension reciprocation plans that “significant” losses are “inevitable” as spiralling costs eat away at members’ pensions.
Money Marketing first warned about the risks of investing in pension reciprocation plans in May. The schemes claim to allow people to borrow up to half of the value of their pension fund before age 55.
In June, Money Marketing revealed The Pensions Regulator had appointed independent trustee firm Dalriada Trustees to seize control of the bank accounts of six schemes used for pension reciprocation due to concerns the loans could be legally void.
In July, 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 a memo sent to members earlier this month, seen by Money Marketing, Dalriada reveals details of the investments made by the schemes’ trustees.
It says the trustees put members’ money into three property investments, Freedom Bay, Cyprus and HYPER, and these have “no realisable value”.
It says Freedom Bay and Cyprus are property developments where construction work has yet to begin, while HYPER is described as a property unit trust that has not yet been listed on the Channel Islands stock exchange.
It says the nature and present value of an additional £1m investment in Entrepreneurs Capital Holdings have yet to be established.
Dalriada’s legal and administration costs are being met from members’ pension funds.
Dalriada says: “There have been significant costs incurred at the outset of Dalriada’s appointment and unfortunately we expect these costs to remain at a high level. Significant reductions in members’ benefits, relative to the amounts transferred in, are inevitable.”
A court hearing to determine the legal status of the pension loan arrangements is expected to take place by early December.

Disclaimer: Just for any legal people that might be reading this in Bournemouth; whats quoted above is Money Marketing's words not mine, so please don't try and sue me for defamation again