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Armed Forces Pension Success for TLW Client

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TLW Solicitors is delighted with a recent ruling upholding a complaint from a former member of the Armed Forces who had been persuaded to transfer his defined benefit Armed Forces Pension Scheme (AFPS) into a risky investment with a company that has since gone into liquidation.

Defined benefit pensions

Defined benefit pensions, also known as final salary or company pensions, provide a specified retirement income until death based on final employee terminal earnings or average salary and often have generous death benefits.

Defined benefit pension schemes are generally a very solid and dependable source of income for retirement and there must be an extremely good reason for someone to transfer into a riskier type of investment. Unfortunately, many people receive unsuitable and sometimes negligent financial advice to transfer out of their defined benefit pension scheme and are mis-sold the benefits of doing so.

TLW client, Mr S, had been a member of the Armed Forces Pension Scheme (AFPS) for 25 years before a representative of the Capita Oak Pension Scheme cold-called him and persuaded him to transfer into a pension that promised higher returns. Mr S described the Capita Oak representative as ‘impressive and convincing’ and that they knew what they were doing.

The Serious Fraud Office opened an investigation into Capita Oak in 2017, following the collapse of the company in 2015. Investors had been promised guaranteed returns of more than 8% over a number of years, however, their money was invested in high risk, unregulated funds, including storage pods, which failed to generate the promised rental income and ended up being worth less than the sum invested.

With the prospect of having lost all of his pension investments, Mr S contacted the specialist Financial Mis-selling Team at TLW Solicitors for help.

Having fully investigated Mr S’s case, the TLW team made a claim on his behalf to The Pensions Ombudsman on the basis that the Ministry of Defence (MOD), who administer the AFPS, should not have allowed the pension to be transferred.

Following extensive representations with TLW pushing the claim over several years, Mr S’s application was eventually dealt with at an Oral Hearing before the Ombudsman, which is very unusual in these cases. Following the hearing, Pensions Ombudsman, Anthony Arter, published a detailed review of the case in December 2021, concluding that the sequence of events leading up to Mr S’s pension transfer was crucial.

During the transfer process, the MOD carried out only minimal due diligence to check that Capita Oak was a registered pension scheme with Her Majesty’s Revenue & Customs (HMRC) and also to confirm Mr S’s identity.

Crucially, before the pension transfer was approved, Mr S told the MOD in August 2013 that he was in receipt of Jobseekers Allowance. This highlighted the fact that Mr S was not an ‘earner’ at the time (as defined by the Social Security and Benefits Act 1992) and therefore had no statutory right to transfer his pension into another fund, information the MOD failed to act upon. The transfer should therefore never have gone ahead.

The Pensions Ombudsman further criticised the MOD for failing to take into account new guidance issued by the Pensions Regulator in February 2013 regarding scams and transfers. The Ombudsman found that Capita Oak’s base in Cyprus, recent registration in 2012 and cold-calling tactics should have raised red flags in relation to Mr S’s transfer request. The MOD did put in place additional due diligence checks in November 2013, but this was two months after Mr S’s transfer.

The Pensions Ombudsman upheld Mr S’s claim and directed that the MOD reinstate his pension benefits to what they would have been had the transfer not taken place. In addition, Mr S was awarded £2000 for the distress and inconvenience caused by the MOD’s maladministration of his pension.

TLW’s mis-selling teamwork with a wide range of sectors where people have been persuaded to transfer out of their defined benefit pensions, including those in the Armed Forces.

Reflecting on Mr S’s recent victory, TLW Solicitors Partner Peter McKenna said:

“Unfortunately, we are seeing more and more cases involving poor pension advice. It is common that former members of the Armed Forces have little or no contact from the MOD or a pensions advisor after leaving their service and pensions and investments can be complicated and confusing. We started working with Mr S after he became aware of the collapse of Capita Oak and the maladministration by the MOD was spotted by our expert team during a detailed review of his paperwork. We are delighted to be able to help Mr S get back the pension pot he is entitled to.”

If you think that you, a friend or a loved one may have lost out financially after transferring a defined benefit pension, then please get in touch with one of the specialist financial mis-selling lawyers here at TLW Solicitors for a free, no-obligation discussion.

You can call us on 0800 169 5925, email info@tlwsolicitors.co.uk or complete the enquiry form.

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