Yahoo Finance ‘Losing my life savings would be utterly disastrous’
Thousands of savers could lose chunks of their pensions if courts approve what is believed to be an unprecedented application to recoup £37m from customer retirement funds.
Around 17,000 savers have accounts with Hartley Pensions Limited, which entered administration in July 2022. Since then, administrator UHY Hacker Young has been trying to sell the pensions business.
According to court documents seen by this newspaper, Hacker Young has now applied to be able to recoup its fees as well as legal costs and the running costs of Hartley from savers’ pensions.
If approved, it is understood it could be the first time that personal retirement savings have been used to cover the costs of a pension firm going bust.
A Hacker Young spokesman said: “The cost of trading to date and the ongoing trading to enable the transfers out to February 2025 need to be funded and without any other line of funding, it falls upon the clients to fund the process.
“It is estimated that the total cost to be funded, including the cost of trading, legal fees and administrators’ fees will be in the order of £37m, however, the administrators are proposing to include a rebate mechanism to refund clients in the event that the costs are less.”
Hacker Young said it is still in talks with potential buyers but warned the process could take more than a year.
Pensions savers’ assets – whether cash, investments or property – are held in trust, which means they are ring-fenced from creditors if a company goes bust.
Paul Maddison, a 68-year-old customer of Hartley Pensions whose £300,000 pension is currently sitting in limbo, said: “These companies have failed and now we’re paying for their failure.”
The City watchdog has been accused of “falling asleep at the wheel” after it approved a series of acquisitions by Hartley of pensions plagued with so-called “toxic assets”.
These are unusual “illiquid” investments which are difficult to sell and typically also high-risk and unregulated.
In just three years – between 2018 and 2021 – the number of self-invested personal pensions (Sipps) administered by Harltey jumped from 1,553 to more than 20,000 with a collective value of £1.3bn, according to Hacker Young’s court application.
Purchases included Sipps from Guinness Mahon, Berkeley Burke and Greyfriars – all firms which have since collapsed and triggered payouts to savers from the Financial Services Compensation Scheme.
Hacker Young has been looking for a buyer to take on Hartley’s entire £1.3bn Sipp business.
The FSCS, the lifeboat scheme that pays out when financial services companies become insolvent, has refused to step in and cover Hacker Young’s fee. It says it does not hold the powers “to fund the continuing costs of running an insolvent Sipp provider”.
Savers face 40pc tax bills
If the courts decide not to issue an order for customers’ pensions to be used to meet running costs, the administrator has said it will likely have to liquidate the Sipps in order to pay itself.
This would mean “deregistering” the pensions and taking them out of their tax wrappers, leaving them vulnerable to HMRC bills of up to 40pc, according to the documents.
Hacker Young has said the minimum “deregistration charge” that HMRC would be looking to collect is approximately £520m (40pc of £1.3bn). This, the company said, averages out at around £42,480 per customer – though balances vary dramatically, from £1 to £1.5m, meaning some customers would pay far bigger bills than others.
In emails seen by The Telegraph, the constituency office of Sir Brandon Lewis – MP for Great Yarmouth – told one customer he was writing to the Chancellor to raise the alarm and see if a grace period could be introduced to save customers potentially losing, in some cases, half of their pensions.
The Treasury said it could not comment on an ongoing court case.
‘It’s a scandal which is flying under the radar’
Claims management firm FS Legal Solicitors LLP is in the process of collecting fees of between £120 and £240 from Hartley customers in order to represent them.
Gareth Fatchett, a partner at the firm, said: “People have no idea what’s going on. It’s very high stakes. These pensions could fall into a mess. People are in retirement, some have passed away. Who is going to hand them over their money if the operator is liquidated?
“The FCA painted Hartley as a white knight. Nobody worth their salt wants to take them [the pension assets] on.”
Hacker Young agreed that “due to the nature of the assets held... no operator to date has been willing to take on the whole book of business”.
John Moret, of consultancy More to Sipps, added: “I’ve never come across this before. It certainly seems to be breaking new ground.”
Telegraph Money has been contacted by dozens of Hartley customers fearing for their life savings.
Mr Maddison, a former IT programmer who lives in Norfolk, has £300,000 locked in a Hartley Sipp.
He said: “It’s a scandal which is flying under the radar. We’re stuck in limbo, which means I can’t move my Sipp. But I do have viable assets – including cash and a trading account.
“I had to retire using other funds – including an inheritance, Isas and job savings until the state pension came along. I’ve used all these up now, so this is all I’ve got left.
“My wife has an NHS pension, but if anything happens to her I’d lose that and be in a very scary situation. Nevermind the plan to leave money for my children.”
Matt Wheeler, 58, from Leicester has £1.5m sitting in his Hartley Sipp.
He said: “I’ve been a wreck over this. It’s been 18 months. Losing this pension would be utterly disastrous. It’d be massive for me. Every year, I topped up my pension. If we fall outside our tax wrappers, we’re in no man’s land.
“You’re led to believe that the one thing you can rely on to be hallowed ground is your pension. But that’s turned out to be utterly untrue.
“Nobody has held our hand and told us we’ll be all right. The opposite has happened. We’re being told it could be far worse.”
FCA ‘asleep at the wheel’
A spokesman for the Association of Member-Directed Pension Schemes, a trade body, said the predicament 16,700 pensioners now find themselves in signals a “failure of regulation” by the FCA.
The association said: “What is happening shouldn’t be happening. The FCA let all these transfers happen. All the while, Hacker Young has ignored pension savers’ rights to transfer out of the schemes and the FCA has not done anything about this.”
Hacker Young said transfers could not take place “until the reconciliation had been completed”.
A spokesman added: “It would also have been unfair to prioritise one client over another and therefore no transfer outs have been processed until such time as the application has been heard and proposed exit and administration charge approved.”
Other pension operators have been quick to call out the City watchdog, too. Nathan Bridgeman, director of pension company SeaBridge SSAS Limited, said the FCA had been “asleep at the wheel”.
Mr Bridgeman claimed that this would be the first time an administrator has tried to obtain a court order to charge clients for the wind-up of distressed pension schemes.
Hacker Young said: “The current terms and conditions that each of the clients are operating under allow for the charging mechanism to be altered simply by giving notice to clients. The administrators are making an application to court so that the court can ratify the change in the terms and conditions and also allows for transparency in the process.”
An FCA spokesman said it was continuing to actively engage with parties in the Hartley case, including the administrators, “to ensure the best outcomes for consumers”.
The watchdog said: “The administrators are not regulated by the FCA and are answerable to the court.”
The Telegraph understands the FCA is in talks with HMRC on the tax treatment of Hartley’s Sipps if they were to be liquidated.
Jade Murray, of law firm Addleshaw Goddard, said she feared the court order – if approved – could set a precedent in future for levying charges against clients trapped in pensions linked to toxic funds.
Recommended
Why it no longer pays to save for your own retirement
