Landmark pensions busting case back in court

In July this year, Dalriada Trustees obtained a £1m freezing order against a number of entities linked to Ark to prohibit disbursement of scheme funds, pending a legal decision.

‘Pension unlocking’ or pension reciprocation agreements claim to offer the chance to release as much as 50% of an individual’s pension fund before the member has reached 55 - the minimum legal age for vesting a pension.

Katharine Davies, partner at law firm McGrigors, which is acting on the matter, said: “We will initially be asking the Court whether the agreements entered into by members of six pension schemes are valid, since there are questions about whether they comply with usual UK pension scheme legal requirements.”

The main debate is over whether a member whose funds were transferred into one of the schemes at a late stage – and who did not subsequently receive a loan – will simply be able to have all or part of their fund transferred out again.

Davies added one complication was there are a number of members now approaching age 55 who will shortly be entitled to draw down their pensions. 

A large proportion of scheme funds has already been paid out in the form of 'loans', and a further significant proportion has been invested in non-liquid assets that may not yield any realisable return for some time, if at all.

Pensions reciprocation schemes have attracted criticism from both HM Revenue & Customs (HMRC) and the Financial Services Authority (FSA) over the past year.

In June, the FSA urged investors to be “extremely cautious” about offers to unlock pensions, while warning it could levy penalties of up to 70% of a fund if members unlawfully withdraw savings.