The Pensions Ombudsman has closed down a “pilot” project dedicated to serious pension fraud after four years due to its funding running out.
The Pensions Dishonesty Unit was established in 2021 to tackle large pension fraud cases in the wake of cases including Norton Motorcycles, Grosvenor and Henry Davison pension schemes.
Tasked with investigating egregious misconduct – including misappropriation of funds and trustee dishonesty – the unit issued determinations on 12 pension schemes, affecting more than 800 members and directing redress of over £40m.
“Investigations are extremely complex and resource-intensive and… it has proven difficult in practice to ensure that scheme members are compensated for losses by the wrongdoers directly.”
The Pensions Ombudsman
The Pensions Dishonesty Unit’s work also led the Pensions Regulator (TPR) to appoint independent trustees to a number of pension schemes.
However, announcing the unit’s closure this week, the ombudsman said actual recoveries had been hampered by legal action and bankruptcies.
“Investigations are extremely complex and resource-intensive and, although they have been providing justice, it has proven difficult in practice to ensure that scheme members are compensated for losses by the wrongdoers directly,” the ombudsman said.
“Parties at fault have been able to delay or avoid liability by filing for bankruptcy, or by appealing our determinations, which forces the other parties, notably the affected members, into court proceedings with the ensuing litigation risk and cost.”
It highlighted that affected members could still access the Fraud Compensation Fund, which is overseen by the Pension Protection Fund.
Future ombudsman action
Funding for the Pensions Dishonesty Unit was provided by the Department for Work and Pensions and ended on 31 March 2025. A limited budget has been allocated through October to complete pending cases.
Pensions Ombudsman Dominic Harris praised the unit’s impact: “I have seen the impact of pensions dishonesty on members who brought us their complaints and I am extremely proud of everything the Pensions Dishonesty Unit achieved.
“It made use of our unique and wide powers to hold individuals accountable for the actions of trustees where there have been acts of dishonesty, and it made a real difference to victims by providing them with a voice and shining a light on pension scams.”
The Pensions Ombudsman will continue referring affected individuals to TPR, Action Fraud and other support routes. It also said it may pursue future investigations in exceptional cases “where there is a reasonable likelihood of redress and/or there is a novel legal issue or different type of scam involved”.
The Pensions Dishonesty Unit’s cases
In October 2022, the unit’s work led to the ombudsman ordering a redress payment of £880,000 to the BWFS Occupational Pension Scheme after its trustees were found to have committed “multiple breaches of trust and many acts of maladministration”.
Two months later, the Pensions Ombudsman ordered three trustees to repay £12.6m to the Optimum Retirement Benefit Plan following a Pensions Dishonesty Unit investigation.
In November last year, the ombudsman ordered a director of Ecroignard Trustees to pay more than £9.7m into two pension schemes after he was found to have been “a dishonest accessory to multiple breaches of trust”.
Soon after, the Pensions Ombudsman ordered trustees of three pension schemes to repay more than £5m after they were found to have acted dishonestly.
