TWM Pension Trust

Dalriada was appointed by the Pensions Regulator as independent trustees on 13 June 2013.

The Pensions Regulator had concerns that the Scheme was being used as a vehicle for ‘pension liberation’. Pensions liberation occurs where individuals are encouraged to transfer to new 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 Scheme which means that all trustee powers and rights are now held by Dalriada.

Due to the nature of the Scheme, there was some uncertainty about whether or not it was an occupational pension scheme. 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 the High Court (in respect of a different set of schemes but with similar documentation) to determine whether or not these schemes were occupational schemes. At the same time it sought to have the Court confirm Dalriada’s appointment to the Scheme using the Court’s own powers, which it did by way of an Order of the Court dated 19 June 2013.

The application to determine whether or not the schemes in question 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 in question were occupational pension schemes.

This meant that the actions taken by the Pensions Regulator to appoint Dalriada were valid.

Dalriada has obtained control of the Scheme bank account.

With regard to the investments made by the Scheme, the position is as follows.

Dalriada has been working to gain control of the investments made by the previous trustees. Dalriada has established that around £3.3m was transferred into the Scheme by way of individual member transfer payments and the vast majority of that money (approx. £2.7m) was paid over to Castle Trust, a company registered in Gibraltar. £125,000 was paid to NewGalexy Services Limited. Of the remainder, about £71,000 was paid in fees and a further £14,000 was paid out in benefits.

The balance, £425,000, was held in cash.

Castle Trust / Elysian Fuels

Dalriada understands that Castle Trust acted as a broker and the Scheme’s investment was in shares in Elysian Fuels No. 27 plc, a company registered in England and Wales.

Dalriada has been advised that Elysian Fuels was originally set up to construct and run a bioethanol plant in the north of England but that approach changed to the re-commissioning of an existing plant in America.

From Dalriada’s investigations it appears that this investment is ‘highly illiquid’, in other words it cannot be ‘cashed in’, and Dalriada is trying to understand when it  will be able to get funds back into the Scheme, and, at that time, what the Scheme’s investment is likely to be worth, if anything.

Dalriada considers the investment in Elysian Fuels high risk and inappropriate, particularly given the fact that the vast majority of the Scheme’s funds have been placed in this one investment. We are concerned that the investment will have little or no value ultimately which will impact greatly on the value of members’ benefits.

NewGalexy Services Limited

Dalriada has established that the Scheme bought 125,000 preference shares in NewGalexy Services Limited, a company registered in England and Wales. Dalriada has now made contact with the company and we await further information.

Dalriada will continue to work to determine how likely it is that we will be able to get some money back from both these investments and, if necessary, what other options might be available to Dalriada (for example legal action).

Until Dalriada can determine the value of the Scheme’s assets, it will not be able to give members an indication of the value of their benefits under the Scheme. However, as set out above, it is likely the realised value of the Scheme’s investments will be materially less than the amount invested.  This would mean that members’ funds would be reduced.

In our 2^nd Announcement we explained that the Pensions Regulator had concerns that Scheme had been used for pension liberation.  If members have received a cash payment as a result of joining the Scheme, then HMRC may find these to be ‘unauthorised payments’.  If that is the case there is a possibility that the Scheme itself may be subject to a tax penalty. If so, this will reduce the remaining funds held in the Scheme and therefore, ultimately, member benefits.

Any costs that are incurred (see below under ‘What costs are being taken?’) will be taken from Scheme funds and will ultimately reduce the amount of members’ funds.

Dalriada has received copies of the member files that were seized by City of London Police from the previous administrators. Based on those records we have now created proper administration records on our computer systems.

As well as taking control of the Scheme’s bank account, Dalriada has also obtained copy bank statements for the Scheme. These have been reconciled against the member files and we have now created the necessary accounting and financial records that will enable us, if we consider appropriate, to prepare annual Report and Accounts for the Scheme as we are required to do under pensions law.

In conjunction with our legal advisors we have been actively pursuing recovery of the investments.  Given the nature of the investments this is proving to be a long and difficult process.

We have prepared announcements for members and a centralised website with FAQ’s. These will be updated on a regular basis.

We are in contact with HMRC regarding the tax position concerning the Scheme and keep the Pensions Regulator regularly updated on progress.

Dalriada is continuing to get as much information as it can regards all aspects of the Scheme.

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 employer linked to the Scheme does not appear to have ever actively traded nor does it appear to have any assets or means to contribute to the costs of running the Scheme. 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 this type 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 Scheme’s funds.

As commented above, until

• the realised value of the investments is known,
• the tax position is clarified,
• the final costs are known, and
• we know how the costs and losses are to be apportioned between the members

Dalriada is not able to value members’ funds. To explain further:

1. Ultimately, Dalriada might require direction from the Court as to how to apportion any remaining assets of the Scheme (taking into account any losses suffered by the investments and costs, including any tax charge) between members.
2. The Trustee can only allow benefits to be taken once it knows the correct value of the fund for each member.  Therefore we cannot agree to any benefits being taken at this point and it may be some time before we are able to do so.

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. Similarly, and as mentioned above, we cannot agree to any type of benefits being taken at this point.

Dalriada’s role as Independent Trustee is to manage the Scheme in the best interests of the members.  If any member feels that they were wrongly advised to transfer into the 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 wish to find out more about pension scams in general further information is available from the Pensions Regulator  and the Financial Conduct Authority.

If you are a member of the Scheme and have a personal question, please contact Dalriada in one of the following ways:

By telephoning our helpline for members
02890 850934

By Post:
Dalriada Trustees Limited
Linen Loft
27-37 Adelaide Street
Belfast
BT2 8FE

By e-mailing twmadmin@dalriadatrustees.co.uk

By using the Get in Touch form on our website.