Pension backlash as savers who lost £10billion to rogue schemes threatened with fines

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A decade ago, fully registered pension scammers conned out £250,000 from a couple, who are yet to receive a penny back of their life savings. Sue Flood revealed how she went through a breakdown after falling victim to a Government-sanctioned pension mis-selling scandal, which saw tens of thousands of savers lose up to £10billion. Army veterans, police officers, firemen, paramedics, care workers and teachers were among those fleeced under an almost decade-long loophole.

They agreed to transfer their pensions to the schemes because they were enrolled with HMRC and the Pensions Regulator.

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

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

This meant, as MPs previously put it, that the scheme turned into a “scammers’ ­paradise”.

Ms Flood, who fell victim alongside her husband in 2011, also faces a double blow of being chased by HMRC for a £60,000 tax bill.

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Those who fall foul of pensions liberation scams are often hit with an unsuspected tax bill which can be 55 percent – sometimes as high as 70 percent – of their pension pot.

These charges happen when savers take out their pensions before the age of 55, but victims are wrongly told there is a legal way around this by scammers.

Pensions accessed before the age of 55 are often called “loans” by the rogue schemes but in reality these are unauthorised payments and subject to the hefty tax charges.

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Ms Flood, who has since then been campaigning for justice for the victims, told The Mirror: “Nothing has ever happened in ten years and my biggest worry is the future.

“I did everything possible to check regulated advice.

“It is an unjust system that I believed would protect me – and now I’m now facing a tax tribunal.

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“There are suicides. There are family breakdowns. I’ve heard from husbands who haven’t told their wives.”

In January, 2020, Prime Minister Boris Johnson vowed to help these victims.

After meeting workers fleeced of their futures in the scandal, the Prime Minister pledged to take up their case to find out why HMRC had “approved” rogue retirement schemes.

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However, people who have fleeced under the loophole. say they did not hear from him again.

The Pensions Regulator and the High Court appointed pension trustees Dalriada to take charge of more than 100 suspected rogue pension schemes affecting more than 5,400 people.

Dalriada, which was appointed in 2011, told The Mirror that for people awaiting a tax tribunal hearing, any recovered funds will have to be frozen until the outcome of these cases.

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However, even after this, there are no guarantees that each victim will receive the full amount of their missing pensions.

In total, HMRC has levied tax charges totalling around £4million.

Sean Browes, professional trustee at Dalriada said: “HMRC has pursued members for tax charges on the basis that the loans members received were unauthorised payments.

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“Dalriada has appealed these scheme tax charges however it is likely that the substantive appeal proceedings will not be heard before next year, more than seven years after Dalriada lodged its initial appeals.

“Until the outcome of the appeals are known, we are unable to give members any indication as to what benefits they might eventually receive from the schemes and when. This is incredibly frustrating for the members and Dalriada.”

A HMRC spokesperson said that since 2013, it has been able to use new laws to help detect scam schemes.

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However, Ms Flood continues to be hit by the tax penalty.

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