UK pension watchdog The Pensions Regulator (TPR) has suspended the trustee of the Optimum Retirement Benefits Plan while he is being investigated by police for conspiracy to defraud.
TPR said trustee Gordon Craig is the subject of an investigation by Titan, a regional organized crime unit, in connection with his role as a trustee of Optimum Retirement Benefits Plan and other pension schemes.
Although Craig has not been charged with a crime, the regulator’s Determinations Panel decided that an ongoing investigation by the police organized crime unit was sufficient reason to suspend him. Section 4 of the Pensions Act of 1995 gives TPR the power to suspend a trustee who police are considering bringing criminal proceedings against for offenses involving dishonesty or deception.
The suspension is “overwhelmingly in the interests of scheme members and for the protection of scheme assets,” said the panel in its determination notice.
TPR appointed Dalriada Trustees, an independent trustee services provider, to oversee the Optimum Retirement Benefits Plan in place of Craig and the other trustees.
“This will protect other pension holders by preventing them from transferring their funds into the scheme,” said TPR in a release.
According to the determination notice, a total of £13.4 million ($17.8 million) was transferred to Optimum Retirement Benefits Plan from the pensions of 288 people. In some cases, members were persuaded by cold calls to transfer their pensions. After participants transferred their pensions to Optimum, they received loans from companies linked to Craig for as much as 75% of their funds, which is considered a type of fraud known as pension liberation, said TPR. Introducers were also paid tens of thousands of pounds in fees.
“The permission of activity that appears to be pensions liberation strongly suggests that Mr. Craig, if he has the knowledge and skill of a pensions trustee, is not exercising it properly,” said the panel.
The funds that were not paid out as loans to members were then invested in high-risk, illiquid investments including gem-mining and olive oil processing, and Craig paid himself nearly £500,000 from pension funds in just 12 months.
The panel said it was also concerned that the Optimum trustees had breached their duties by keeping poor records and having limited knowledge of how the pension plan should have operated.
Optimum Financial Solutions Limited, the sponsoring employer of Optimum Retirement Benefits Plan, was dissolved in the public interest by the High Court in February following an Insolvency Service investigation.