Pension Scams

20 August 2018


In a very recent Pensions Ombudsman case, a pension scheme member (Mr N) complained that the Authority responsible for the administration of his scheme (the Police Pension Scheme) transferred his pension fund to a new pension scheme without having conducted adequate checks. He also alleged that the Authority failed to provide him with a sufficient warning as required by the Pensions Regulator. Mr N was concerned that his entire pension fund may have been lost or misappropriated as a result of the transfer.

The Ombudsman upheld the complaint against the Authority because it failed:

  • to conduct adequate checks and enquiries in relation to Mr N’s new pension scheme;
  • to send Mr N the Pensions Regulator’s transfer fraud warning leaflet; and
  • to engage directly with Mr N regarding the concerns it should have had with his transfer request, had it properly assessed it.

To put matters right, the Authority was directed to reinstate Mr N’s accrued benefits in the Scheme, or provide equivalent benefits, adjusting for any revaluation that has arisen since the transfer.

However, to avoid ‘double counting’, the Authority would be entitled to recover from Mr N the amount of his pension fund that the trustees of the new pension scheme are able to retrieve for him (if any).

The Authority was also directed to pay Mr N £1,000 to reflect the materially significant distress and inconvenience that Mr N suffered.


Mr N submitted a transfer request to the Police Pension Scheme in November 2013. In August 2014, a transfer payment, of £112,077.66, was made to The London Quantum Retirement Benefit Scheme, a recently registered occupational pension scheme, minus a fee of £5,000 to a firm of financial advisers (Gerard Associates Limited).

Mr N subsequently had concerns about the transfer payment and how it had been invested. In June 2015, Dalriada Trustees Limited was appointed by the Pensions Regulator (TPR) as an independent trustee to London Quantum.


The Ombudsman noted that Mr N’s transfer request was received in November 2013, nine months after TPR’s pension liberation fraud guidance was issued. So, early 2013 marked “a point of considerable change in the level of due diligence expected of trustees” as reflected in in Ombudsman determinations from 2013 that involved transfer complaints.

The Ombudsman found that the Authority responsible for the administration of the Police Pension Scheme did not conduct the level of due diligence expected of schemes when evaluating whether a valid transfer application had been made.

Notably, the Authority did not send Mr N a copy of the Regulator’s ‘scorpion warning’ (although it did provide a link in its newsfeed). That said, the Ombudsman added that sending the scorpion warning was not the only expectation of trustees and administrators when evaluating a transfer request. In this case the Authority ignored potential ‘red flags’ and had no direct engagement with the member. For example, the member could have been asked why, when he was still employed as a policeman, he was transferring to another occupational scheme sponsored by a dormant employer that did not employ him and was registered at the other end of the country. In addition, the Authority did not obtain a copy of the trust deed and rules of London Quantum to ensure it met the statutory requirements for a transfer.

Ultimately, the Ombudsman concluded that there was maladministration by the Authority because of its inadequate due diligence and that, on the balance of probabilities, but for the Authority’s maladministration, Mr N would not have gone ahead with the transfer.

Based on his conclusions, the Ombudsman found that the Authority’s failure to carry out reasonable checks before transferring Mr N’s pension meant it did not have a statutory discharge in respect of the transfer and made the directions set out in the Summary to this article. He did not, however, award Mr N his legal costs as he could have made the compliant without instructing a lawyer.


This is the first reported decision of the Ombudsman directing that a member should be reinstated in their transferring scheme after falling victim to a pensions scam.

The determination reinforces the need for robust due diligence when trustees and administrators receive a transfer application. It also serves as a reminder of the importance of clear and prominent warnings being given to members about the risks of pension scams.

Disappointingly, the Ombudsman did not refer to the new Code of Good Practice on Combatting Pension Scams which was recently launched by the Pension Scams Industry Group.

To discuss the findings of the Pensions Ombudsman in more detail or the administration practices in place for your scheme, speak to your usual JLT contact or John Wilson, Head of Technical (