Trustees facilitating pension liberation found liable for £5.2m repayment by The Pensions Ombudsman’s Pensions Dishonesty Unit

An extensive investigation conducted by our Pensions Dishonesty Unit (PDU) into three occupational pension schemes (the Eleven Property Pension Scheme, the SHK Property Services Pension Scheme and the Gilbert Trading Pension Scheme), a pension administration company (Brambles Administration Limited) and the appointed trustees of the Schemes (Mr Simon Hamilton Kaigh, Mr Michael McNally, SHK Property Services Limited, Gilbert Trading Limited and Eleven Property Limited), has resulted in directions that the trustees, including Mr Kaigh and Mr McNally in their personal capacities, should repay in total over £5m into the Schemes.

Closely following the Ecroignard Trustees Limited Determination, where the director of the corporate trustee was ordered to repay personally circa £10m into two pension schemes, the PDU has now issued directions totalling more than £40m to be repaid into ten schemes.

In this latest case, the Deputy Pensions Ombudsman found that scheme funds were invested in breach of trustee investment duties, in furtherance of a pension liberation arrangement and by trustees in a position of conflicting interests. Through their involvement in the Schemes, Mr Kaigh and Mr McNally were found to have acted dishonestly and have attracted personal liability. Brambles, an administrator of the Schemes, was found liable as a dishonest assistant in respect of one of the breaches of trust.

Some of the investments were in offshore companies with links to the individuals involved in the Schemes and several of the investments were used as a conduit to facilitate pension liberation. The investments overall were high risk, undiversified and were not made in the best financial interests of the members.

The complaints were raised with The Pensions Ombudsman (TPO) as some Scheme members had become concerned about a lack of information around investment performance, and an inability to take benefits from the Schemes or transfer their funds. The complaints we received were investigated by the PDU due to the nature of the investments.

It is understood that there are 117 members of these Schemes which will have been affected by the actions of the trustees.

The Deputy Pensions Ombudsman has directed that over £5.2m is repaid by the trustees into the Schemes for the benefit of the membership as a whole, and also to pay two of the Applicants £6,000 each and three of the Applicants £4,000 each in recognition of the exceptional distress and inconvenience each has suffered. The parties have been notified of the Determination, which is final and binding, subject to appeal to the High Court on a point of law. Information obtained during the investigation has been passed on to The Pensions Regulator.

The case highlights the importance of pension scheme members being cautious when transferring their pensions and being aware of the risks of pension scams and dishonest behaviour.

Dominic Harris, Pensions Ombudsman, said: 

“This is another example of the important work of the Pensions Dishonesty Unit. Cases that the PDU investigate are complex and resource-intensive but, as well as the directions to repay schemes more than £40m in total, its work is also vital in raising people’s awareness of scams and holding those who act dishonestly accountable for their actions.”

TPO is a member of the Pensions Scams Action Group a multi-agency taskforce working together to tackle pension fraud. Action Fraud reports that at least £17.7m was lost in 2023 to pension fraudsters and highlights pensions scams can happen to anyone. The Financial Conduct Authority provides more information on being ScamSmart with your pension.

If you are worried that you may have been a victim of fraudulent activity:

• For example, a potential scam, or you think you may have been contacted by a fraudster, report it to Action Fraud online at actionfraud.police.uk or by calling 0300 123 2040. In Scotland, report it to Police Scotland on 101.
• Read our factsheet on how you can bring a complaint to us.