Pennines and Mendip

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.

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.

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.

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.

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.

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.

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.

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.

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.

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
Linen Loft
27-37 Adelaide Street
Belfast
BT2 8FE

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

By using the Get in Touch form on our website.