‘I'm resigning myself to having lost it all': Man might lose £20,000 after pension scheme goes bust

Andrew Muir is one of hundreds of pension savers whose long-term plans have been thrown into chaos by the failure of Fast Pensions Ltd.

The scheme was wound up in May and was one of five related companies that were closed down, affecting approximately 520 people who had been encouraged to transfer their pension savings from their existing providers into one of the 15 schemes run by the firms.

The trustees of the scheme estimate that at least £21 million was transferred to the scheme, representing a significant chunk of the retirement pot of those who had been persuaded to move their money across.

‘You feel so stupid’

Andrew’s story was revealed by The Telegraph, which said he had moved £20,000 from a personal pension plan into a Fast Pensions scheme in 2013. In November last year he began to be worried because he could not access the cash.

Then he received a tax bill for £800 because it was claimed that he had made withdrawals from his pension before the age where he could do so without getting taxed. But he told the newspaper he had not actually received any money from the company at all.

Andrew wasn’t stupid, he was one of hundreds of people convinced to transfer substantial amounts into the company’s schemes.

Like many of the company’s customers, he had made his investment after spotting an enticing advert on social media and signed up, but the business also used cold calling as a means of attracting new customers.

Some people were even persuaded to transfer their pension savings after they applied for loans and were told they would only get credit if they agreed to move their pensions.

‘Unsavoury tactics’

The Insolvency Service refers to Fast Pensions as “rogue” and accuses it of “abusing” millions of pounds. It found that the companies misrepresented the schemes they offered and failed to disclose full information about the risk and returns.

Members were told their funds would be invested in a wide-ranging portfolio when transferred, but instead they were put into high risk investments. Millions was paid out in commission.

David Hope, Chief Investigator for the Insolvency Service, said: “People work long and hard to put money away for their retirements but the six companies that have been shut down paid scant regard to their members.

“They used unsavoury tactics to attract members and failed to paint the full picture as to what would really happen with their savings.”

So, what happens now for Andrew and the hundreds of other people who believed these companies’ misleading advice?

The Pensions Regulator will appoint an independent trustee to take over the affected schemes. It’s not yet clear how many of the pension fund members will be able to have their money returned or how much may have been lost.

The Financial Services Compensation Scheme (FSCS), which offers a protection to savings, mortgages and pensions (among other financial products) if the financial firm goes bust, has yet to declare the pension scheme in default. This means it has not yet been able to come to the rescue of savers.

However, FSCS told Yahoo UK that it continues to monitor the firm circumstances closely, so there is still hope. If it is declared in default, the scheme could be protected by the FSCS guarantee, giving customers a route to claim some of their funds back.

How can pension savers stay safe?

It’s really important to take extra steps to protect your life savings from the many rogue operators who want to prey on them, particularly since new pension freedoms made it easier for people to access their pension savings.

Before making any major decisions about pension savings it’s a good idea to seek qualified financial advice, as an extra safeguard for your money.

While some pension providers are rogue, many cold callers are simply criminal fraudsters. Yet research from the Financial Conduct Authority (FCA) shows that 52% of 45 to 65-year-olds with a pension do not think they are likely be targeted by a pension scam.

More than a fifth said they were too savvy to be scammed and 18% thought they didn’t have enough money saved in their pensions to be targeted.

Yet victims of pension scams last year lost an average of £91,000 each to fraudsters. They reported receiving cold-calls, offers of free pension reviews and promises that they would get high rates of return – all of which are key warning signs of scams.

Mark Steward, the FCA’s Executive Director of Enforcement and Market Oversight, said: “The best way to protect yourself is to always check the FCA Register to make sure that anyone offering you pension advice or any other financial service is authorised by the FCA.”

If the service is authorised by the FCA then customers may be able to claim compensation from the Financial Services Compensation Scheme (FSCS) if their investments are mistreated or if they are given poor advice or management. You must check that the firm and the financial product you are using is FSCS protected to help keep your money safe.