Trustee suspended after police investigation launched into pension fraud
Wednesday 20 June 2018
A pension scheme trustee has been suspended by The Pensions Regulator (TPR) after detectives launched a fraud investigation.
Gordon Craig is the subject of an investigation by Titan, the North West regional organised crime unit, in connection with his role as a trustee of Optimum Retirement Benefits Plan and other pension schemes.
TPR’s Determinations Panel has decided (PDF, 227kb, 6 pages) that it is “overwhelmingly in the interests of scheme members and for the protection of scheme assets” for Mr Craig to be suspended from acting as a trustee on any scheme while the police investigation continues.
It also decided that Dalriada should be appointed as an independent trustee to Optimum Retirement Benefits Plan to act in place of Mr Craig and the other trustees to the scheme. This will protect other pension holders by preventing them from transferring their funds into the scheme.
From 2015, a total of £13.4 million was transferred to Optimum Retirement Benefits Plan from the pension schemes of 288 people. In some cases members were cold-called to persuade them to transfer their pensions.
After members transferred their pensions to the scheme, they received loans from companies linked to Mr Craig. This was for as much as 75% of their funds and is a type of fraud known as pension liberation. Introducers were also paid tens of thousands of pounds in fees.
The remaining funds not paid out as loans to members were then invested in high-risk, illiquid investments including gem-mining and olive oil processing. Mr Craig, an insolvency practitioner, paid himself nearly £500,000 from scheme funds in just 12 months.
The Determinations Panel noted that a number of people involved in the setting up or running of Optimum and linked schemes had been convicted of dishonesty offences. Two – Martin Dowd and Robert Winstanley – had been jailed for money-laundering while a third – Richard Jones – was convicted of the same crime and given a suspended prison sentence.
The panel was also concerned that the Optimum trustees had breached their duties by keeping poor records and having limited knowledge of how the pension scheme should have operated.
In its determination notice (PDF, 338kb, 20 pages) on the appointment of an independent trustee to the scheme, the panel said: “The permission of activity that appears to be pensions liberation strongly suggests that Mr Craig, if he has the knowledge and skill of a pensions trustee, is not exercising it properly.
“Similarly, the highly illiquid and high-risk investments, several of which appear to have failed, is consistent only with Mr Craig not having or exercising the necessary knowledge and skill.”
Optimum Financial Solutions Limited, the sponsoring employer of Optimum Retirement Benefits Plan, was wound up in the public interest by the High Court in February following an Insolvency Service investigation.
- Section 4 of the Pensions Act 1995 gives TPR the power to suspend a trustee who police are considering bringing criminal proceedings against for offences involving dishonesty or deception.
- Section 7 of the Pensions Act 1995 gives TPR the power to appoint an independent trustee to a pension scheme. Section 8 gives TPR the power to direct the independent trustee to exercise powers to the exclusion of the existing trustees.
- The Determinations Panel operates separately from other parts of the organisation, including the case teams, and is not involved in investigating cases. It is responsible for making formal decisions relating to cases where TPR seeks to use certain powers. These decisions are called ‘determinations’ and the panel has the power to make a determination where:
- TPR takes action in relation to a breach of pensions law
- a problem has arisen in a scheme that TPR considers can be put right with the use of one of its powers, or
- an application has been made by trustees, managers, members or employers of a scheme for TPR to use one of its powers
- TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund; to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of TPR’s functions under Part 3 of the Pensions Act 2004 only).
James Glover 01273 662098
Matt Adams 01273 662086