Thousands have lost their nest eggs in savings scams sanctioned by HMRC due to decade-long loophole

Tens of thousands of workers have lost up to £10billion of savings in Government-sanctioned pension scams.

Army veterans, police officers, firemen, paramedics, care workers and teachers were among those fleeced under an almost decade-long loophole.

Most agreed to transfer their nest eggs to the rogue schemes because they were enrolled with HMRC and the Pensions Regulator – making it appear above board. 

Employers – including the Ministry of Defence, the NHS and the Royal Mail – approved the transfers for the same reason – that the schemes were officially registered.

Yet under rules introduced by Tony Blair’s government in 2006, HMRC enrolment could be secured online in minutes – and with virtually no checks.

MPs described it as a ‘scammers’ paradise’. In a second blow, the victims face hefty fines because many of the bogus schemes broke tax laws.

They are being targeted with big bills by HMRC even though it registered the schemes in the first place.

The Mail can today expose the extraordinary scale of the scams and the official failures that allowed them to flourish. From a painstaking study of records, we have identified at least 105 rogue pension schemes registered with HMRC.

The ‘industrial level’ con is suspected of targeting hundreds of thousands of savers – costing them up to £10billion between them.

Victims cheated of their nest eggs said every day was a ‘slow torture’ with the constant terror of losing their homes and going bankrupt.

Soldiers suffering traumatic stress after serving in Iraq and Northern Ireland face having to work until their eighties. Some victims have been hounded at their homes by bailiffs sent by HMRC.

Because many of the scam schemes destroyed or never kept records of members, it is feared some victims are still unaware their pension has vanished. Others will not discover the truth until they reach retirement.

The Financial Conduct Authority has warned that more than five million individuals may fall prey to pension scammers. MPs and campaigners demanded a public inquiry and accused HMRC of ‘profiting from the proceeds of crime’.

Our investigation also found that:

• A detective investigating a possible fraud told the Mail that stealing a pension was easier than stealing a TV because of lax regulations;
• Scammers took huge fees to transfer pensions, then repeatedly reinvested the savings into high risk investments that paid the them hefty commissions until the nest eggs were obliterated;
• A Government pensions adviser made millions from his involvement in five scam schemes that destroyed hundreds of lives;
• Scammers using HMRC listed pension schemes continue to fleece thousands of savers a year.

The number of pension scams multiplied after April 2006 when the Blair government introduced a ‘simplification’ of the rules to bring ‘security, dignity and comfort in old age’.

The previous system of checking trustees before granting them ‘approved’ status was switched to online registration that automatically confirmed the status of a scheme. Tax reference numbers were often granted within 24 hours. The scammers launched sales blitzes, often using cold calling to offer targets free ‘pension reviews’ before proposing switching existing pensions to another ‘more lucrative’, but still Government registered, scheme.

The Mail has seen scores of emails and brochures produced by rogue schemes where they emphasise that they are registered with HMRC and the Pensions Regulator as their main selling point.

When they convinced victims to move their retirement savings, the only significant check their existing pension scheme made before transferring the cash was to ensure the new scheme was HMRC registered.

The Mail identified 8,000 victims from 105 schemes based on publicly available figures, but a Pensions Regulator source said the full number is probably over 100,000.

Margaret Snowdon, of the Pensions Scams Industry Group, said: ‘What we have seen so far is likely the very tip of the iceberg.’ From talking to insurers, administrators and trustees, she estimates the full figure for all such scams could be £10billion.

Andy Agathangelou of the Transparency Task Force, which campaigns for greater openness in financial services, said: ‘We are not just not talking about dodgy characters. There was systematic, industrial-scale scamming.

‘The changes to the registration system made it a crooks’ paradise.’

The MoD, which agreed to transfer servicemen’s pensions, said it moved funds only to schemes ‘approved by HMRC’. HMRC said it registered pension schemes for tax purposes and did ‘not regulate pensions’.

It said that it changed its processes for scheme registration applications in October 2013 and online applications were now ‘fully risk assessed’ before a decision is made on whether to register them.

The following year HMRC also introduced a ‘fit and proper’ person check allow it not to register a scheme, or to de-register an existing scheme.

But Miss Snowdon said the prior ‘registration free-for-all’ meant there could be still be many ‘sleeper cell’ schemes that scammers are still using to target victims today.

A spokesman for the Pensions Regulator said: ‘On many occasions we have put independent trustees in charge of scam schemes to prevent criminals draining away victims’ savings and we have a number of ongoing major criminal investigations into pension fraud worth tens of millions of pounds.’

‘Like lambs to the slaughter’: These people played by the rules but lost their pensions to ruthless scammers… and now the Government is chasing them for even more cash 

They are hard-working people who put their faith in the system.

Their reward was to have their life’s savings lost and retirements destroyed after transferring their nest eggs to Government-sanctioned pensions that turned out to be scams.

And having lost everything, many are now being targeted by Her Majesty’s Revenue and Customs for huge tax bills on the money that vanished in the rogue schemes they had trusted in the first place because they were enrolled with HMRC.

Victims described having mental breakdowns, panic attacks as they live in constant fear of the future, while the scammers who lost their millions have in most cases escaped with little more than a ‘slap on the wrist’.

As Sue Flood, who lost £125,000 with her husband, put it: ‘We and the rest of the victims sit like lambs to the slaughter whilst we wait for HMRC to devour our individual carcasses and to levy a tax penalty. How can this be justice?’

She was one of thousands of people who fell victim to scam pension schemes which they trusted because they were registered with HMRC.

In fact, the schemes could be registered online with the Government agency in a few minutes with almost no checks.

Rogue operators targeted victims, often through cold-calling, and persuaded them to move their cash. Most of it then vanished in fees to scammers who put the cash into high-risk illiquid investments.

In 2011, former sales and marketing executive Mrs Flood and her husband lost £125,000 to the Ark scheme, which cost nearly 500 people their retirement savings and was later described by a High Court judge as a ‘fraud on the trustees’ powers’.

The scheme was HMRC-registered, but because it was later ruled to have broken tax laws, the authority is now pursuing her for a potential £60,000 bill. The mother-of-two, now an ambassador for the Transparency Task Force which campaigns for more openness in financial services, said her husband now works seven days a week to try to make up for the loss from their pensions, which they had saved diligently for their old age.

‘It is difficult to describe the sheer torture the last eight years has been, constantly dealing with the complete unknown.

‘It has had a terrible impact on my family, health and mental wellbeing.

‘The sheer terror and night sweats sometimes are too overwhelming to describe.

‘It is difficult every day in these circumstances especially as we feel like sitting ducks, waiting for HMRC to pick us off.’

IT WAS MY FUTURE . . . I FELT SUICIDAL

Ex-postal worker Dennis Waite was left feeling suicidal after losing his £108,000 pension to HMRC-registered scammers. He is now also being targeted by the taxman.

The 52-year-old, from Braintree, Essex, worked full time at the Royal Mail for 21 years. In 2013, he was cold-called about the Capita Oak scheme, which he was told would give a better return than his Royal Mail pension and a lump sum £5,000 payment from the savings.

He said: ‘I was initially doubtful but they stressed the Government registration and provided me all the details of it.

‘It all checked out so I went ahead and transferred my pension. Royal Mail didn’t question it either.’

Mr Waite received the £5,000, but then heard nothing about the rest of his pension.

‘There were no statements or any information at all. I was wondering what the hell was going on. I kept trying to get in touch but was getting nothing. It was a nightmare.’

The scheme was later wound up after the Pensions Ombudsman said it was connected to a ‘pension liberation scam’ and is now being investigated by the Serious Fraud Office.

‘The £108,000 was my life savings – my entire future – I felt suicidal. You go through initial stage of ‘I want to throw myself under a bus’.

‘Through the internet I got in touch with others and began to understand what a massive racket it was. It was a giant ring – fleecing hard-working people.’

But worse was to come. Despite having registered the scheme in the first place, HMRC is now demanding he repay the £5,000 he received.

‘HMRC say I’ve had an unauthorised payment out of my pension. But they were the ones that registered the scheme which is the only reason I signed up to it in the first place.

‘I have lost everything to scammers and now I am expected to pay the very people who helped convince me to trust the scammers.

‘How can that be right?’

ALL OUR PLANS HAVE GONE UP IN SMOKE

Former ambulance worker John Jewitt, 51, is another victim of Capita Oak.

He now expects to work into his late 60s as a school caretaker after losing his £72,000 NHS pension pot to the scheme.

Mr Jewitt, who has an 18-year-old daughter and married his second wife Karen, 55, two years ago, was targeted by cold-callers in 2012. ‘It wasn’t something I took lightly and asked for some more details,’ he said.

‘Their brochure was glossy and professional, but the thing that clinched it was that they were quoting an HMRC registration number. You don’t expect people involved in dishonest schemes to be registered with HMRC and it made them seem to me to be legitimate.

‘I contacted the NHS to speak to them about moving my pension money over to Capita Oak and asked their advice.

‘They came back and told me they had done due diligence and were happy for me to transfer my money.’

The father-of-one added: ‘Looking back now, I can’t see what that due diligence involved because from my perspective this was a shocking scam. I just feel the NHS let me down. And that goes even more for HMRC. What checks were they doing?’

Mr Jewitt, who worked for the North East Ambulance Service between 1996 and 2006 as a stores handler, said: ‘Those firms have vanished and I think my money has gone with them, I’ve no real hope of getting any of it back.

‘It has ruined my plans for the future. I now expect to be working until I’m in my late 60s. I’m in a job that involves a lot of physical labour as a caretaker at a primary school. All our plans have gone up in smoke and it’s caused me and my wife so much worry.’

TAXMAN SENT THE BAILIFFS TO MY HOME

Former printer Mark Baldwin, from Westcliff-on-Sea in Essex, was hounded at his home by HMRC bailiffs after he lost £60,000 to the Ark scheme.

After working in a printing firm for 23 years he was persuaded by a financial adviser to move his £100,000 Legal and General pension into the Ark scheme in 2011.

He even received an email in December 2010 from one of the scheme’s administrators confirming that the funds were ‘not subject to tax.’ Mr Baldwin, 52, received around £40,000 in a lump sum – for which he paid £5,000 in fees – and the other £60,000 was due to be to be reinvested.

‘Legal and General were happy to send the money over. Everything seemed great. Then 18 months later, bang, it all went wrong,’ he said.

‘The money that had been invested went and then I got demands from HMRC. They were demanding 55 per cent of the lump sum back because apparently it broke the tax rules, even though they had registered the scheme. It was a terrible time. HMRC were extremely aggressive in their dealings with me.

‘At one point, they instructed bailiffs to turn up at my home and try to take away my stuff.

‘I was going to be declared bankrupt and lose my home – everything I’d worked for.’

Thankfully for Mr Baldwin in the end he was able to borrow from family and friends to pay the bill, and is now paying off the £25,000 he owed.

But Mr Baldwin, who now works as a postman, stressed: ‘It’s been a terrible ordeal. The last 18 months have been horrendous.

‘The £60,000 is gone, I’m never going to see that again, and there’s still a lot for me to pay off.

‘I cannot comprehend the response from HMRC given their registration of the scheme was why I trusted it.’

A Royal Mail spokesman said: ‘Like all pension providers, we have a statutory obligation to release pension funds to HMRC-registered schemes when requested by members. We also advise pension plan members to seek independent financial advice from an adviser authorised by the Financial Conduct Authority before making any decision about their pension.’

Legal & General said its approach to pension transfers was to ‘limit the risk of financial crime and to protect all our policyholders.’

A spokesman added: ‘At the time Mr Baldwin’s pension was transferred, due diligence checks were undertaken which included ensuring the receiving scheme was registered with HMRC,’

‘Whilst Legal & General endeavours to protect policyholders with our enhanced processes we are also required to abide by Pension Ombudsman rulings to transfer a pension as a statutory right to transfer exists.’

A spokesman for the NHS Business Services Authority, which administers the health service pension scheme, defended its actions.

He insisted: ‘All transfer applications are subject to the requirements of the NHS Pension Scheme regulations and over-arching pension legislation, including confirmation of the registered pension scheme status with HMRC.

‘All due diligence checks are completed in line with any requirements or guidance in place at the time of the transfer. We also have a statutory obligation to make a transfer payment where all the requirements are met and an individual has made a valid application.’

‘Making millions from other people’s misery’: A Government adviser, call centre chief and pension scheme director are among those who stand accused of involvement in pension schemes that exploited loophole in the law

A government pensions adviser was involved in five rogue retirement schemes that destroyed hundreds of lives, the Mail can reveal.

Victims accused Stephen Ward of ‘making millions from other people’s misery.’

The 64-year-old father of two lives with his wife Carol in a Costa Blanca villa with pool and views of the Mediterranean. He also boasts on Facebook of a £1million Florida real estate empire and further properties in Spain.

Meanwhile victims of the pension schemes he helped promote and administer fear losing their homes and spending their old age in poverty after losing their nest eggs because they trusted the ‘reckless’ financial adviser. 

Many also face huge tax bills after he encouraged them to sign up to schemes that broke HMRC laws.

Mr Ward was an introducer and promoter of one of the Ark schemes, one of the first pension liberation scams in 2010-11. He was later involved in transferring victims’ funds to the Capita Oak and Westminster schemes in which hundreds of people lost millions of pounds.

He went on to become a trustee of the bogus London Quantum scheme.

More than 90 workers invested £6million in retirement funds in London Quantum and most lost the lot. 

Mr Ward was banned from being a pension scheme trustee two years ago after the regulator ruled he was behind a ‘series of extremely serious failings’ and showed a ‘lack of integrity’ by putting London Quantum pension funds into high risk investments which bore ‘all the hallmarks of being scams’.

Members, most of whom have lost all their cash, believed they were transferring their nest eggs into low or medium risk investments when they joined the scheme. Instead their money went into Brazilian eucalyptus farms, hotel rooms in Cape Verde and car park bays in Dubai.

In a damning ruling, the Pension Regulator said: ‘Mr Ward’s conduct was reckless in all the circumstances, and amounted to turning a blind eye to a significant issue and failing to ask obvious questions.

‘It is difficult to believe that Mr Ward was unaware of the risks that his actions and failings posed to members and the likelihood that they breached the requirements of pensions legislation.’ 

Mr Ward had previously boasted to the financial press that his scheme was ‘completely above board’, stressing that it was registered with HMRC.

Incredibly, his disastrous role in the London Quantum scheme came at around the same time that he was an adviser on the 2014/15 Taxation of Pensions Bill, having previously been a Government expert on other financial matters.

Mr Ward also wrote the Tolley’s Pension Taxation manual – described as the bible of the pensions industry – for 2015/16 and 2016/17 and contributed to pension textbooks for the Institute of Financial Services.

This is despite him previously having been involved in four other retirement schemes in which members lost all their savings. 

In 2010/11 he made £350,000 in fees after introducing 176 members to the Ark scheme which was later ruled by a judge to be illegal and a ‘fraud on the trustees’ powers’.

Mr Ward was not a trustee of the scheme but hosted seminars promoting Ark around the UK, including Surrey golf clubs where he assured attendees there were no tax liabilities on pension schemes.

In fact most victims not only lost all their cash but are now facing tax bills because the scheme broke tax laws.

Sue Flood has endured years of hell after she and her partner lost £125,000 through trusting Mr Ward’s advice on the Ark scheme and is also facing a potential £60,000 bill.

She said: ‘He made a big thing about being a Government pensions adviser.

‘If the Government listens to them why the hell shouldn’t I? But I am the one facing a huge tax bill from the Government after being cleaned out because I trusted a Government adviser. Where is the justice in that?’ 

He denied any wrongdoing, however, and the Pension Regulator later ruled that there was ‘not sufficient evidence of Mr Ward having actual knowledge of, or turning a blind eye to, the illegal nature of the activity of the Ark Schemes’.

It also did not find a lack of honesty or integrity on this issue.

But it added: ‘Mr Ward ought to have gained knowledge and experience from a close involvement with a pension scheme that was found to be a vehicle for pension liberation and had such grave consequences for members.’ 

But in 2012 his company arranged transfers to two other pension liberation schemes, according to documents obtained by the Mail from victims who lost their savings in the schemes.

Premier Pension Transfers, for which Mr Ward was the registered secretary, director and sole shareholder, was named in letters administering the transfer of funds to the Capita Oak pension scheme, including those that lost their cash in the rogue scheme now being investigated by the Serious Fraud Office. 

It also appears on letters organising the transfer of pension funds to the Westminster scheme which an Insolvency Service investigation later found in 2016 had misled the 79 members who invested over £3.3million.

Mr Ward also advised savers and helped some of the transfers into the now defunct Continental Wealth Management in which hundreds of people lost up to £25million after putting their money into high-risk investment schemes that paid huge commissions. 

A police officer whose £112,077 pension disappeared in the London Quantum scheme, said: ‘It’s very frustrating that it was allowed to happen time after time especially by someone advising the Government on pensions.

‘It was very glossy brochures and HMRC regulated, so from the point of view of the man on the street you assume you’re quite safe.’

The officer, who does not want to be named because he is still serving, is the only individual known to have won an ombudsman’s appeal against his pension provider for agreeing to the transfer.

He has had his money reinstated. He added: ‘I know many others, including other officers, who have lost it all and are suffering terribly. It does seem unjust that their futures have been torn apart by this while the people behind it have been able carry on for such a long time with very little real action being taken against them.

Mr Ward did not respond for request to comments.

Vanished, salesman who claimed taxman’s approval 

A salesman vanished after helping to convince hundreds of customers to transfer millions of pounds into scam schemes by boasting they were ‘UK-government approved.’

Stuart Grehan ran two call centres with up to 20 staff in each that cold-called victims and misled them about their expertise and experience.

They falsely offered ‘guaranteed’ returns so their targets would move retirement savings into the schemes, the Insolvency Service said. In fact, most of the cash went into unregulated investments in storage units which did not yield the level of returns promised. In many cases, members lost everything.

Many of the victims are also facing large tax bills from HMRC because – by moving their cash from existing schemes – they had broken tax rules.

Victims who were targeted in 2013 and 2014 said he successfully tricked them by – correctly – stressing that the schemes registered with the taxman.

One of Mr Grehan’s companies, Jackson Francis, boasted on its website that it was a ‘UK-government approved personal pension scheme, which allows individuals to make their own investment decisions from the full range of investments approved by HM Revenue and Customs.’

Two of the main schemes, the Henley Retirement Benefit Scheme and Capita Oak Pension Scheme, were also registered with HMRC.

Letters from the company to potential clients prominently displayed the registered number from HMRC, which many victims saw as a ‘veneer of legitimacy’.

But after signing up and transferring their cash, victims heard nothing from the company. When they tried to contact staff, the line went dead. Mr Grehan, who was then using the surname Chapman-Clarke, disappeared in 2014 and his exact whereabouts are unknown.

He posts pictures on Facebook of him enjoying himself with his family in the Portsmouth area.

Two relatives agreed to pass him the Mail’s request for comment but he did not respond. In a ruling last year the Insolvency Service said Mr Grehan admitted making false and misleading claims about his company’s level of expertise and experience and false claims about the range of investment products and promises of providing ‘unbiased advice’.

The only product that was actively promoted was the unregulated investment in storage units that his companies had an interest in.

There was no evidence that Mr Grehan knew the two schemes were acting fraudulently.

He agreed to a nine-year voluntary ban from working as a director following the probe. Karl Dunlop, of Imperial Trustee Services Ltd, and Ian Dunsford, of Omni Trustees Ltd, agreed to voluntarily bans of seven and nine years respectively for failing to act in the best interests of pension members and subsequently failing to ensure investments were adequately diverse.

The investigation centred on the conduct of directors connected to a Gibraltar based company, Transeuro Worldwide Holdings Ltd.It helped to fund Sycamore, an introductions company that Mr Grehan owned.

A villa in the sun for boss of £21million scam

The director of a rogue pension scheme that abused millions of pounds of savers’ money is living in luxury – while victims struggle to pay the heating bills.

Sara Moat, 43, was the director of ‘unscrupulous’ Fast Pensions which used cold-calling and misleading claims about retirement funds to persuade 520 individuals to transfer their pension savings worth £21million into one of its 15 schemes in 2012 and 2013.

Many investors have since lost all their retirement cash and, as one victim put it, had their ‘future robbed’.

Fast Pensions and five related firms were wound up this year after an investigation by the Insolvency Service under Project Bloom, a cross-industry taskforce involving Government departments, regulators and police.

Investigators found Fast Pensions misused funds, misrepresented the schemes and that its advisers failed to disclose the high risk and illiquid investments they made or the benefits members would be entitled to.

At least £4million was used to pay commissions and the remaining funds were largely used to make loans to companies and other entities that appear to be connected with Fast Pensions and trustees of the schemes, a report said.

Fast Pensions failed to keep adequate accounting records or cooperate fully with the investigation, making it impossible to determine the full value of the members’ funds that have been lost.

Neighbours told the Mail that Mrs Moat lives with her husband Peter in a two bedroom villa with a pool in the upmarket Spanish town of Denia on the Mediterranean.

The home is listed in Mr Moat’s mother’s name. Mrs Moat is also named with her husband as an executive of the firm Deyse Investments.

By contrast, Maria McCulloch, from Kilmarnock in Ayrshire, south of Glasgow, turned 65 in March and had planned to retire after 43 years work but cannot because she had £65,000 of her savings in Fast Pensions.

When she moved her pension in 2012 she was told by an ‘independent consultant’, who charged her a £1,000 set-up fee, that she would receive £80,000 at retirement. ‘There was a lot of paperwork and it all looked legitimate, but now the money’s gone,’ she said.

Mrs McCulloch has been forced to stay on three days a week as an administrator in the procurator fiscal’s office.

‘It’s incredibly frustrating to think that those behind this scam are still living the good life while I am struggling on,’ she said.

‘I know I’m not alone. A lot of people caught up in this scheme have been robbed of their future.’

David Hope, chief investigator for the Insolvency Service, said ‘unscrupulous’ Fast Pensions had paid ‘scant regard’ to members who had worked long and hard to put money away for their retirements.

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

Mrs Moat did not respond to requests for comment.