Forces veterans have had their futures ruined by a Government-sanctioned pension scam.
Although some are still suffering trauma from tours of Iraq, Afghanistan and Northern Ireland, they now face working into their eighties after losing nest eggs worth up to £50,000.
They said they had been ‘betrayed and abandoned’ by the Government which registered the rogue scheme but now refuses to help.
Forces veterans have had their futures ruined by a Government-sanctioned pension scam enrolled with HMRC
They are also furious at the Ministry of Defence for approving cash transfers despite earlier warnings from watchdogs.
Most victims agreed to switch their savings because the bogus schemes were enrolled with HMRC and the Pensions Regulator.
The Mail revealed yesterday that tens of thousands of pensioners have lost up to £10billion between them in a wider scandal.
The scams multiplied following the simplification of pension legislation by Tony Blair’s government in 2006. This meant that rogue financiers could register retirement schemes with the authorities in a few minutes – with virtually no checks.
Most of the Armed Forces victims were cold-called by the Pinnacle Pension Scheme soon after leaving uniform. It promised better returns than the Army scheme and Pinnacle hired former soldiers, paying them £250 for every comrade they signed up.
Ex-servicemen make up the majority of the 156 victims who moved £4.8million to Pinnacle.
They have been told there is ‘fat chance’ of getting their money back after the scheme was wound up last year.
To reassure potential customers, Pinnacle sent them documents with its HMRC and Pensions Regulator registration numbers prominently displayed in bold.
Chartwell Trustee Pension Solutions, the company behind Pinnacle, also employed former paratroopers to target fellow ex-servicemen.
The Mail revealed yesterday that tens of thousands of pensioners have lost up to £10billion between them in a wider scandal
One was employed full-time, the other as a freelance ‘introducer’ who was paid £250 for everyone he persuaded to transfer an Army pension to Pinnacle.
Christoph Williams was contacted by the introducer in 2014, five years after leaving the Royal Engineers. He agreed to transfer his £8,400 pension.
‘He said he’d already moved his pension over and told me it looks promising and gives a nice return on the money we accumulated while serving,’ said Mr Williams.
‘Myself and most of the rest of the Army lads don’t know about pensions. They really sold it to us as being registered by HMRC and so it was trustworthy, or so they said. Being in the Army, you trust what you are told. I agreed to it and signed up.’
We fought for our country but now we have been robbed, says veteran
An Iraq veteran who lost his entire £48,000 pension pot says he feels ‘betrayed and abandoned’ by the Government.
Paul Watson, who joined the Lancers – an Army cavalry regiment – as a teenager and served tours of Iraq in 2003 and 2005, said: ‘It’s a massive scandal. Hundreds of veterans are being done over. It is absolutely atrocious, we have fought for our country but have been robbed.’
Paul Watson says he feels ‘betrayed and abandoned’ by the Government
The 36-year-old father of two, from Ibstock in Leicestershire, was cold-called by a scam scheme a few months after leaving the Army in December 2013.
He was sent the Pinnacle brochure, which stressed its HMRC and Pensions Regulator registration numbers.
When he applied to move his Army pension to Pinnacle, the MoD approved it ‘no questions asked’. His savings soon vanished.
‘I spent 12 years fighting for Queen and country and I’m getting nothing for it,’ he said.
‘The impact this has had on my and my family’s life has been devastating with major long-term implications for us all.
‘Since I’ve left, I’ve not put anything into a pension pot because I thought I had a big pension. Now I discover it’s been snatched away. How is this allowed to happen when this was registered with Government departments?’
Mr Watson was frustrated to discover the Ministry of Defence, like all occupational scheme trustees, had been warned by the Pensions Regulator about scam schemes and the importance of due diligence before making transfers into them.
He added: ‘They expect us to put our lives on the line for them. Surely they owe us some duty of care? We are soldiers, not pensions experts. We served loyally but if feels like we’ve been betrayed and abandoned.’
The transfer was made in May 2014 – more than a year after the MoD had been warned by regulators about the transfer of pensions to scam schemes.
After hearing nothing from Pinnacle for years, Mr Williams called his friend and was told it had ‘gone under’ and that the former paratrooper employed full-time by its administrators had disappeared.
‘My friend was in a terrible way and felt very bad about what had happened. It’s an awful situation,’ he said. ‘I’ve spoken to many other victims of this, but many feel ashamed of what happened and are reluctant to speak out.
‘Hundreds lost their cash in the scam, some who served for 20 years. Meanwhile the people out there who have knowingly done this have so far avoided any real punishment.
‘For anyone losing their pensions is a terrible thing, but I do think for the Forces it is particularly hard. A lot of us are no good for other jobs by the time we leave because of injuries and mental health problems. It means veterans are even more dependent on their pensions than most.’
A judge wound up Chartwell Trustee Pension Solutions in June 2018, after ruling that it had operated with a lack of commercial probity, a lack of transparency, and without any presence at its registered office address.
Insolvency Service investigators were unable to obtain any clear view of how the company operated.
A freedom of information request has revealed that between 2013 and 2015, at the height of the scams, about 3,600 former service personnel transferred their money out of the MoD pension scheme.
The ministry said the majority switched to other public sector pensions but that still means that scores or even hundreds more veterans may have been fleeced.
An MoD spokesman said: ‘We were obliged to agree to transfer pensions when an individual requested this and we always advised that those wishing to transfer should seek independent financial advice before doing so. We only transferred to pension funds which were approved by HMRC.’
Nicole Newbury, the director of compliance at HMRC, said that in 2013 and 2014 tougher registration tests were introduced to ‘detect, disrupt and deter promoters of these pension scams’.
She added: ‘Since these new laws were introduced, HMRC has noted an 88 per cent drop in scheme applications, and last year alone rejected 11 per cent of applications for failing to meet the high standards required – safeguarding taxpayers and their savings.’
The veterans’ money vanished after being invested in a storage unit company. Pinnacle was among a number of schemes – and individual investors – to put cash into Store First and three related companies that were eventually wound up in April.
Between 2011 and 2016, the firms sold 22,600 ‘storage pods’ for a combined total of £209million. In one promotional video, it was claimed that a £15,000 investment could return £13,000 in six years – a profit of 85 per cent.
But in April the High Court in Manchester ordered that the four companies – Store First Ltd, Store First St Helens, Store First Blackburn and SFM Services – should be closed in the public interest. The last listed director of Chartwell Trustee Pension Solutions declined to comment.
I will have to work until I’m 80 to make up the £20,000 I lost
Andy Chadwick will have to work until he is 80 after losing almost £20,000
A former soldier who was almost blown up while on active service will have to work until he is 80 after losing almost £20,000 to pension scammers.
Andy Chadwick was diagnosed with post traumatic stress disorder after nearly being killed three times in Northern Ireland.
But his hard-earned savings were lost after he signed up to a scheme that he trusted because it was officially registered with HMRC and the Pensions Regulator.
The father of three said: ‘The person who cold-called me made the point very clearly that Pinnacle was Government registered. It made me feel secure. I don’t know anything about pensions, but if something was agreed by the Government agency I had no reason to doubt it. As far as I was concerned I was just moving from one Government pension to another to get a slightly better deal.’
Mr Chadwick, 49, said he was devastated when he discovered the scheme had been wound up and he had lost his money.
‘It was a very tough time,’ he added. ‘I had only just been with my father when he died from cancer.
‘As it stands I’ve no pension. I will need to work until I’m 80 to make it up. It’s devastating to think that I’ve got to work that long to rebuild something I already had.’
Mr Chadwick, who served in the Light Infantry and the Royal Green Jackets, said he struggled to find work after leaving the Army and suffered nightmares and flashbacks.
For NHS workers and posties who battle inclement weather to bring us the mail, the promise of a secure and comfortable pension after years of public service is the very least they deserve.
And yet, as the Mail revealed yesterday, many of these everyday heroes have not only been cheated out of their pensions after incompetent checks by Her Majesty’s Revenue & Customs made them vulnerable to cold-hearted scammers, but they are now also being hounded by HMRC for alleged unpaid bills.
The suffering and hardship caused by these HMRC-approved providers is appalling in its own right. But it is HMRC’s response – to brazenly turn the fire on the victims – that makes this debacle truly scandalous.
If ever there were a moment for a wide-ranging inquiry into Britain’s tax authority, it is now.
We all applaud tax collectors when they chase down genuine cheats. In Philip Hammond’s last full budget the Government boasted that since 2010 it had ‘secured and protected’ £185billion of tax that would have otherwise gone unpaid.
But for all this fanfare, the truth is that HMRC too often targets local businesses and entrepreneurs struggling with the bureaucracy of tax returns, rather than the big corporations who are treated with velvet gloves. Rather than being bombarded with dreaded brown envelopes, these multi-billion players are able to reach accommodating deals personally negotiated by top HMRC officials.
The Financial Conduct Authority, which is currently run by the incoming governor of the Bank of England Andrew Bailey, should have been keeping a tighter rein on firms offering this advice
Yet none of this is as unconscionable as the ongoing actions of HMRC, which is turning to the courts to recover tax from those who joined rogue pension schemes precisely because they were approved by the government. These people not only lost their money – they are now being hounded by the taxman because those very schemes broke tax rules.
While Britain prides itself on its fair and responsible tax authorities, I have long suspected that our system is not fit for purpose. I say this not just as an outspoken critic of HMRC, but as someone who became the subject of a five-year intrusive audit into my own, very minor tax affairs.
At one point, an inspector argued I should have paid tax on 50 per cent of a hotel bill when my wife joined me at an out-of-town speaking engagement, even though the overnight-room bill would have been the same had she been there or not.
Rather than get involved in an extensive tussle, I paid up. But it was proof of our overzealous taxman’s warped priorities.
Yet even the most ardent critic of HMRC could not fail to be astounded by its crass response to this latest pension scam, especially given that at least £1.7billion of taxpayers’ and consumers’ money is spent on financial regulation of one kind or another – and that is before the running costs of HMRC and the Pensions Regulator are considered. As the consumer advocate Paul Lewis has pointed out, that is almost as much as the Home Office spends on the Metropolitan Police.
The blame does not, of course, completely lie with HMRC.
At the core of the current scandal are the trustees of public sector pension schemes, such as those run by the NHS and Ministry of Defence, who co-operated with these (often rogue) pension advisers to get employees and former employees off their books – knowing full well that the kind of pensions offered in public services are guaranteed and in no way dependent on the movements of financial markets.
That individuals, lured in by promises of supercharged returns and one-off immediate payments, were allowed to switch into private schemes is a tragedy.
The Financial Conduct Authority, which is currently run by the incoming governor of the Bank of England Andrew Bailey, should have been keeping a tighter rein on firms offering this advice.
But what is truly scandalous is that HMRC – once considered a beacon of rectitude and responsibility – registered the schemes, thereby branding the unsafe pension funds as the real deal in the first place.
It may have tightened up its checks now but that’s too late for the tens of thousands of workers who have lost up to £10billion in savings. Meanwhile, the Pensions Regulator, which was created to prevent retirees’ pensions being looted, should also be ashamed.
This is the organisation whose cack-handed supervision of BHS’s pensions was exposed when the company was sold to an unreliable owner for just £1 and later collapsed with the loss of 11,000 jobs and a pension deficit of more than £500million. And now we know that it was also more than happy to register rogue pension plans, once the HMRC had itself endorsed them.
It is, however, the HMRC that must bear the brunt of the blame.
As much as the revenue service may seek to slough off responsibility, it cannot pretend that its initial registration of flawed and in some cases corrupt pension plans did not enable the scammers to thrive in the first place.
Instead of making the lives of many of the affected future retirees and pensioners a misery, it should be recommending the Government set up a compensation fund for victims.
They have faced a terrible injustice – and senior officials at the tax authority should hang their heads in shame.