Pensions Regulator  

Former trustees face court over ‘illegal’ pension loans

Former trustees face court over ‘illegal’ pension loans

Two former trustees will appear before court as part of a prosecution waged by The Pensions Regulator (TPR) over allegations they made illegal loans and investments.

Cumbria-based Stephen Smith, aged 63, and Lancashire-based David Boardman, aged 68, were trustees of the Worthington Employee Pension Top Up Scheme.

They appeared at Preston Magistrates’ Court yesterday (October 19) accused of making five prohibited loans from the scheme and one prohibited investment.

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While Smith pleaded guilty to making five prohibited loans and not guilty to the sixth charge of making a prohibited investment, Boardman did not enter a plea.

Both men were released on bail and will appear at Preston Crown Court for a plea and trial preparation hearing on November 22.

A third man, West Oxfordshire-based Derek Thomas, aged 85, worked as a professional adviser to the scheme.

He has been charged with four counts of assisting or encouraging prohibited loans, and will attend Preston Magistrates’ Court next week (October 26).

The value of the loans and the investment made by the scheme totalled £700,000.

This included three loans by the scheme to Stonewell Property Company Limited, the parent company of the sponsoring employer, Marcus Worthington and Company Ltd.

It also included an investment in a retail park where land had been let on a long lease to companies connected and associated with Marcus Worthington and Company Ltd.

The case signals a crackdown across the industry on pension scheme malpractice. 

Last week, two pension trustees calling themselves 'qualified financial advisers' were ordered to pay back scheme members over £880,000 by the Pensions Ombudsman after the consumer body found evidence of “multiple breaches of trust and many acts of maladministration”.

In the TPR’s case announced today (October 20), the regulator reminded the industry that certain employer-related investments made by an occupational pension scheme are prohibited.

Breaching these rules, it said, is a criminal offence and can potentially lead to an unlimited fine and/or imprisonment.