THIS IS VERSION 1 OF THIS DOCUMENT – ISSUED 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 www.dalriadatrustees.co.uk/conder-lincoln 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. Click on the relevant Scheme name above to see the documents available for download.
Copies of all Announcements issued to date can be downloaded from the links below:
Frequently Asked Questions
FREQUENTLY ASKED QUESTIONS WILL BE ADDED HERE FROM TIME TO TIME AS THEY ARE IDENTIFIED – PLEASE CHECK BACK FOR UPDATES.
Q Why and When were Dalriada Trustees Limited (Dalriada) appointed?
Dalriada was appointed by the Pensions Regulator as independent trustee on 8 May 2013.
The Pensions Regulator had concerns that the Schemes were being used as vehicles for ‘pension liberation’. Pension liberation occurs where individuals are encouraged to transfer to schemes in the expectation of getting early access to their pension fund (before the minimum retirement age of 55), either by way of a loan or some other form of cash inducement.
Such payments are in breach of the Regulations that govern occupational pension schemes and can expose members to potentially significant tax charges.
Dalriada was given exclusive powers to the Schemes which means that all trustee powers and rights are now held by Dalriada.
Due to the nature of the Schemes, there was some uncertainty about whether or not they were occupational pension schemes. As the Pensions Regulator can only appoint trustees to occupational pension schemes this might have meant Dalriada’s appointment was not valid.
Dalriada made an application to Court to determine whether or not the Schemes were occupational schemes. At the same time it sought to have the Court confirm Dalriada’s appointment to the Schemes using the Court’s own powers, which it did by way of an Order of the Court dated 7 June 2013.
The application to determine whether or not the Schemes were occupational pension schemes was heard either side of the Court’s summer break in July and October 2013. In his judgment handed down on 21 October 2013, Mr Justice Morgan determined that the Schemes were occupational pension schemes.
This meant that the actions taken by the Pensions Regulator to appoint Dalriada were valid.
Q Are the pension schemes’ assets safe?
Dalriada has obtained control of the Schemes’ bank accounts.
With regard to the other investments made by the Schemes, the position is as follows:
Dalriada has found that the Schemes did not make any investments and were established for the purpose of acting as ‘feeder’ schemes for the Lincoln Pension Umbrella Trust (LPUT). This means funds would be transferred into one of the Schemes and then transferred out again shortly afterwards to LPUT.
The current membership of the Schemes is made up of those members who transferred into the Schemes but who did not subsequently transfer to LPUT. For those members, funds are currently held in cash.
However, the Pensions Regulator claimed that LPUT is not a recognised occupational pension scheme and was simply a vehicle used to provide cash to members and that this represented a misappropriation of pension scheme monies.
The Pensions Regulator commenced Court action against LPUT and the parties responsible for setting it up.
Following a court hearing in March 2014, Mrs Justice Rose found in the Pensions Regulator’s favour. The effect was that the supposed legal loophole on which LPUT was based did not exist and it could not and did not work in the way members and potential members had been told it did.
Further to the judgment, late in 2014, LPUT and the parties responsible for setting it up reached agreement with the Pensions Regulator and agreed to discontinue LPUT.
One possible outcome of this means that any transfers to LPUT might be “unauthorised payments”. Pension schemes can make certain “authorised payments” as set out in law. For example, the cash sums paid when a member retires or the lump sum paid when a member dies. These lump sum “authorised payments” can usually be paid tax free.
“Unauthorised payments” are subject to tax charges.
If the transfers made to LPUT by the Schemes are found to be “unauthorised payments”, there is a possibility that the Schemes themselves may be subject to tax penalties. If so, this will reduce the remaining funds held in the Schemes.
Dalriada is making enquires of HMRC regarding the tax position and taking legal advice. If and when it is in a position of clarity or, otherwise, can provide members with a meaningful update, it will issue a further Announcement.
Q Will the value of my pension fund be reduced?
Until Dalriada can determine the value of the Schemes’ assets, it will not be able to give members an indication of the value of their benefits under the Schemes. At this stage, the main uncertainty is whether or not the Schemes will be liable to tax charges as a result of the payments to LPUT. As commented above, any tax charges imposed by HMRC will reduce the remaining funds and, so, the value of members’ benefits.
Further, the nature of the Schemes and the high cost of resolving the uncertainties involved, will also impact on members’ fund values. When Dalriada is able to calculate them, members’ fund values will be significantly less than the value of funds transferred in.
Q What actions have you taken and what actions are you taking?
Dalriada has received copies of the member files that were seized by City of London Police from the previous administrators. Based on these, we have now created proper administration records on our computer systems.
As well as taking control of the Schemes’ bank accounts, Dalriada has also obtained copy bank statements for the Schemes. These have been reconciled against the member files and we have now created the necessary accounting and financial records that will enable us to prepare annual Report and Accounts for the Schemes as we are required to do under pensions law.
Q What costs are being taken?
Usually, where a scheme is an occupational scheme, some, if not all, of the costs of running the scheme would be met by the employer. The employers linked to the Schemes do not appear to have ever actively traded nor do they appear to have any assets or means to contribute to the costs of running the Schemes. This means that the costs of the previous trustees and its administrators and advisers, as well as Dalriada’s costs and legal costs, have been, and will continue to be, met from Scheme funds.
Whilst Dalriada will do all it can to minimise costs, because of the number of complex issues associated with these types of scheme, not least the work involved in setting up proper administration records and trying to identify and recover investments, costs will be significant and will impact on the value of the Schemes’ funds.
Q What is the value of my pension fund and when can I take my benefits?
As commented above, until the tax position is clarified, Dalriada is not able to value members’ funds.
Ultimately, Dalriada might also require direction from the Court as to how to apportion any remaining assets of the Schemes (taking into account costs, including any tax charges) between members.
Dalriada can only allow benefits to be taken once it knows the correct value of the fund for each member. Accordingly we cannot agree to benefits being taken at this point and it may be some time before we are able to do so.
Q Can I transfer out of the Schemes to another registered pension scheme?
Until Dalriada can place a value on members’ funds it will be unable to pay out any transfer values. It may be many months before any transfer values can be paid out.
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.
If a member has a complaint about any action taken by Dalriada than 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?
You may contact Dalriada in one of the following ways:
By telephoning our helpline for members
Dalriada Trustees Limited
27-37 Adelaide Street
By e-mailing firstname.lastname@example.org
By using the Get in Touch form on our website.