Pennines and Mendip

THIS IS VERSION 10 OF THIS DOCUMENT – ISSUED WEDNESDAY 24th JULY 2014 AT 1430 BY DALRIADA TRUSTEES LIMITED. FREQUENTLY ASKED QUESTIONS WILL BE ADDED HERE FROM TIME TO TIME AS THEY ARE IDENTIFIED – PLEASE CHECK BACK FOR UPDATES. THIS DOCUMENT MAY BE FREELY CIRCULATED OR REPRODUCED IN ITS ENTIRETY BUT DALRIADA TRUSTEES LIMITED MUST BE ACKNOWLEDGED AS THE SOURCE OF THIS DOCUMENT. WE WOULD APPRECIATE THAT WHEN CIRCULATING ELECTRONICALLY OR OTHERWISE THAT A LINK TO dalriadatrustees.co.uk/pennines-and-mendip IS SHOWN SO THAT READERS CAN EASILY ACCESS THE LATEST VERSION.

This Frequently Asked Questions (FAQ) document relates to the following pension schemes (the Schemes):

Dalriada has made documents available for download by members relevant to their Scheme. Currently these include the Scheme’s Annual Report & Accounts. You can access the list of documents available for download by clicking on the Scheme name link below.

Mendip RBS
Pennines RBS

Copies of all Announcements issued to date can be downloaded from the links below:

Announcement 1 – 2nd April 2012
Announcement 2 – 29th June 2012
Announcement 3 – 31st August 2012
Announcement 4 – 1st November 2012
Announcement 5 – 2nd November 2012
Announcement 6 – 6th November 2012
Announcement 7 – 13th November 2012
Announcement 8 – 26th November 2012
Announcement 9 – 15th February 2013
Announcement 10 – 23rd May 2013
Announcement 11 – 23rd July 2014
Announcement 12 – September 2015
Announcement 13 – April 2016

On 28th March 2012 Dalriada Trustees Limited (“Dalriada”) was appointed as an Independent Trustee of the Schemes. Since Dalriada’s appointment it has been reviewing the underlying scheme documentation, and it has taken legal advice on various issues.

On 31st October 3012, Dalriada became aware of an email sent to members by Mr John Woodward. Dalriada has responded to that e-mail in Announcement 4, issued on 1st November and which can be downloaded via the link above.

In Announcement 1 Dalriada commented that its appointment was subject to a further review by the Regulator’s internal Determinations Panel (the Panel), known as the ‘compulsory review’ process.

This review process will culminate with an Oral Hearing, to be held on 8th November in Brighton in front of the Panel.

The Panel has recently made it clear that it must, and will, have regard to the interests of the Schemes’ members in carrying out its compulsory review and the Panel has expressed a willingness to receive members’ views either at or in advance of the hearing.

Details of how members can contact the Panel are set out in Announcement 5, issued on 2nd November and which can be downloaded from the link above.

The Panel met on 8-9 November 2012.

Having completed its review the Panel has determined to confirm the order made under section 7 of the Pensions Act 1995 in respect of the appointment of Dalriada as trustee of the Schemes. It also determined to confirm the order under section 9 of the Pensions Act 1995 allowing that all property and assets of the Schemes be vested in, assigned to and transferred to Dalriada.

The Panel’s decision is set out in our Announcement 7 which can be downloaded from the link above.

In our fourth Announcement dated 1st November we advised that Dalriada had sought expedition of the Beddoe hearing and that it understood that the Beddoe application would be heard in early November, possibly starting as early as Monday 5th. The hearing did commence on Monday 5th November. However, it has now been adjourned until Monday 12th November.

At the adjourned hearing, after hearing full argument from all 3 barristers, and therefore both for and against the application, the Court decided to give appropriate directions to authorise Dalriada to continue to pursue the litigation.

Dalriada remains committed to bringing matters to a conclusion as quickly and as cost effectively as possible.

Dalriada has lodged its own Summary Judgment application. It is hoped that the Court will find Dalriada’s claim sufficiently strong that it is able to uphold it without the need for legal proceedings going to full trial (which would be both expensive and lengthy).

However, Dalriada has agreed to ‘stay’ this application and to take part in a mediation with the previous trustees and the Hedge companies in an attempt to reach a negotiated settlement.

A day has been set aside for the mediation with a respected and experienced QC instructed by the parties as the independent mediator, who will assist in trying to achieve a settlement. This will take place on the 5th March 2013.

Dalriada said it would update members after the 5th March. However, if a settlement was not reached, it would continue with the Summary Judgment application.

No agreement was reached on the 5th March. However, negotiations continued such that Dalriada continued to hold off with the Summary Judgment application in the hope that settlement terms could eventually be agreed.

Dalriada acknowledges that some weeks have now passed since the 5th March and apologises that it has not been in a position to update members more fully up to this point and, further, appreciates members’ patience during this time.

However, Dalriada is now able to confirm that non-binding ‘heads of terms’ have been agreed with the Hedge companies that should enable Dalriada to get to a position where, ultimately, it takes control of the assets of the Hedge companies (these assets being the subject of Dalriada’s claim).

The parties will now work towards putting the heads of terms into a full settlement agreement as quickly as possible over the forthcoming weeks.

Members should be aware that, whilst the agreement of heads of terms represents a significant step forward, there are several more stages to go through before Dalriada is able to calculate the value of, and subsequently settle, members’ benefits.

Dalriada will continue to update members, the next update being in June or July by which point it will hopefully be in a position to confirm that a settlement agreement has been signed.

More details are included in our tenth Announcement which can be downloaded from the link above.

Dalriada has included here some Frequently Asked Questions (FAQs) and answers. It is hoped that these will provide answers to common questions from members.

Q Are the Schemes’ assets safe?

Dalriada is in possession of the preference share certificates in Hedge Capital Investment Group (HCIG) that represent the Schemes’ investments, alongside cash, currently in the Schemes’ bank accounts.

Dalriada has obtained control of the Schemes’ bank accounts.

In addition, because the assets of the Hedge companies were largely made up of monies from the Schemes, Dalriada has sought, and obtained, a freezing injunction over the assets of the previous trustees and the Hedge companies.

Dalriada has also lodged a claim with the High Court for the monies currently held in the various Hedge companies to be returned to the Schemes.

Dalriada continues to carry out due diligence with regard to the investments made by Hedge Capital Investments Limited (HCIL) that underpin, ultimately, the value in HCIG and likelihood or otherwise of HCIG being able to support the promised 3% return to holders of the preference shares.

It would appear that a significant amount of money is still retained in cash.

Q Will the value of my pension fund be reduced?

Until Dalriada is able to put a value on the Schemes’ investments (effectively place a value on HCIG), it will not be able to give members an indication of the value of their benefits under the Schemes.

It is possible that, as a result of the nature of some of the investments that underpin HCIG, the charges paid to the administrators and other costs, not least the legal costs incurred to date and any subsequent costs incurred in resolving the uncertainties involved, members’ fund values, when Dalriada is able to calculate them, will be less than the value of funds transferred in.

Q What happens if I have transferred in funds but I have not received a loan payment?

Whilst the freezing injunction remains in place, you will not now receive a loan payment from HCL. If Dalriada is successful in its claim over the assets of the Hedge companies, no further loan payments will be made.

Q Can I transfer out of the Schemes to my original scheme (or to another registered pension scheme)?

Once Dalriada is able to put a value on members’ benefits, members will be permitted to transfer their benefits. However, it is likely to be many months before transfer values can be paid out.

Members should be aware that, because of the ways the Schemes have been established, members may not have a statutory right to a transfer value.

Q What happens if my transfer has not been completed yet?

If you are in the process of transferring into the Schemes, Dalriada suggest you advise the administrators of your transferring scheme that the transfer is not to go ahead.

If Dalriada receives any cheques in respect of transfer payments, these will not be banked and will be returned to the administrators of the transferring scheme.

Please be aware, however, that where transfer payments have been made direct to the trustees’ bank account, we are unable to prevent these transfers from taking place.

Q Are the Schemes illegal?

Their main purpose of any pension scheme is to provide some degree of financial security in retirement. They are long term savings vehicles.

To encourage individuals to make pension provision, schemes enjoy significant tax advantages. There are, however, strict rules that govern when, and how much, cash can be taken.

There are also Regulations that govern how trustees can invest pension scheme funds.

The regulatory bodies may look to take action where there appears to be an attempt by schemes to allow early access to pension funds – so called ‘Pensions Liberation’.

The Pensions Regulator has put up a warning on its website with regard to ‘Pensions Liberation’ schemes:

www.thepensionsregulator.gov.uk/regulate-and-enforce/pension-liberation

The Schemes have been used, principally, as vehicles to facilitate loans to members, albeit by investing funds through companies, on the face of it, unconnected to the Schemes.

Dalriada has been advised by a leading barrister (a Queen’s Counsel or ‘QC’) who specialises in pensions and trust law matters.

In broad terms, the advice Dalriada has received is:

There is a strong possibility that the investments made were ‘void’ because they were made, in part at least, to allow the loans to members to be made.

The investments made were in breach of the Investments Regulations and so were, arguably, made in breach of trust.

Finally, that the loans to members were unauthorised payments and, as such, potentially liable to tax charges.

Dalriada has lodged a claim with the High Court for the monies currently held in the various Hedge companies to be returned to the Schemes.

Dalriada needs to make an application to the Court (a so-called Beddoe application) to seek approval of the continuation of these proceedings, a standard step for a trustee to take when pursuing Court proceedings on behalf of members.

The application includes the involvement of a Representative Beneficiary who has an opportunity to air opposing arguments on behalf of any members of the Schemes who dispute the benefit of the proceedings being pursued. This is, therefore, the members’ opportunity to argue that the proceedings should not be continued.

Mr Peter Gwilliam who is a scheme member has kindly agreed to represent the interests of members in the Court proceedings. Mr Gwilliam has obtained legal representation through solicitors, Eversheds, who in turn are instructing a barrister. All Mr Gwilliam’s reasonable costs (which will include the cost of the solicitors and barrister) will be met from the assets of the Schemes.

If you wish to make contact with Eversheds you can do so by any of the following methods:

Post: FAO Catherine Wasilewski, Eversheds LLP, Bridgewater Place, Water Lane, Leeds LS11 5DR

Email: pensionschememembers@eversheds.com

Alternatively, if you wish to speak to someone at Eversheds, they will be available to take telephone calls between the hours of 10am and midday and 2pm and 4pm Monday to Friday on 0845 498 7344.

Contact with Eversheds should be limited to relaying information that it may be useful to bring to Mr Gwilliam’s attention for the purposes of the Court proceedings.

Q When will Dalriada be able to calculate and settle benefits?

Going forward, Dalriada needs to make an application to the Court to seek approval of the continuation of the proceedings.

Subject to a successful application, Dalriada will continue its claim with the aim of taking control of the monies transferred to the Hedge companies from the pension Schemes.

As confirmed in Dalriada’s eighth Announcement, the application was successful.

However, as set out in its ninth and tenth Announcements, Dalriada has embarked on mediation with the previous trustees and the Hedge companies to attempt to reach a settlement. As at May 2013, non binding heads of terms have been agreed and it is hoped that a full settlement agreement can be signed in July 2013.

Dalriada might require direction from the Court thereafter as to how to apportion assets of the Schemes (and any losses suffered by investments) between members.

Dalriada will also need to establish both through the Court and in discussion with HMRC as to whether any loan payments to members were unauthorised payments and, as such, if tax penalties are to apply.

Unfortunately, this means it may be a long time before Dalriada is in any position of clarity as to how the Scheme should be managed going forward and how to calculate and settle members’ benefits.

Q Will I have to pay back any loan I have received?

Not immediately. However, you should continue to make your contractual interest payments and you will be required to repay the amount borrowed at the end of the contract term.

Whilst there might be an expectation that the loan can be repaid using any tax free cash payable on retirement from the Schemes, there is no guarantee that the amount of cash available will be sufficient to repay the loan and, in that instance, you will be required to find any balance from alternative sources.

The Court will need to decide if the loans are unauthorised payments and, as such, if any tax is potentially payable. Thereafter, it would be down to HMRC whether or not they decide to enforce the tax charge.

In the event that tax penalties are payable you will be advised of the amount and payment conditions. Any penalties would be in addition to the interest payments and loan repayment.

Q I feel that I have been wrongly advised to transfer into a scheme. Who should I complain to?

Dalriada’s role as Independent Trustee is to manage the Schemes in the best interests of their members. If any member feels that they were wrongly advised to transfer into a scheme then Dalriada cannot assist with this complaint. You should immediately contact the firm that provided the advice.

You can get free advice from organisations like the Citizens Advice Bureau or see the Money Advice Service’s tips on making a complaint.

If a member has a complaint about any action taken by Dalriada then you should complain in the first instance to Dalriada.

You may also find it helpful to read our page about the regulation of pension schemes. If you wish to speak to someone independent of Dalriada, The Pensions Advisory Service provides a free, independent source of advice.

Q What should I do if I have any further questions?

If you are a member or prospective member of one of the Schemes and have a personal question please contact Dalriada in one of the following ways:

By telephoning our helpline for members
02890 412880

By Post:
Dalriada Trustees Limited
22 Great Victoria Street
Belfast
BT2 7BA

Via e-mail:
By e-mailing penninesandmendip@dalriadatrustees.co.uk

By using the Get in Touch form on our website.