Court blocks pension 'unlocking' firms' bid to move £1m

The High Court has blocked three pension ‘unlocking’ companies moving more than £1m worth of assets abroad over fears pensioners could lose their money in the risky schemes.

Court papers show a High Court ruling dated 17 June blocked three entities - Ark Business Consulting, Ark Commercial Pension Planning and Ark Commercial Retirement Planning - from moving up to £1.1m from England and Wales.

The Pensions Regulator appointed Dalriada Trustees to look after a number of schemes which were previously administered by Ark Commercial Retirement Planning. The independent trustee firm instructed law firm McGrigors, which secured the freezing injunction.

It said Ark Business Consulting was closely associated with the development of pension 'unlocking' or 'pension reciprocation' arrangements.

The schemes offer to release as much as 50% of an individual's pension fund before the member has reached 55, the minimum legal age for vesting a pension.

They claim to get round pension rules by transferring member funds to a new scheme. A loan is then made to the member from another separate scheme administered by the same part of up to 50% of the transferred funds.

The new ‘master scheme' is then invested in assets which theoretically yield returns to top up the pension pot to its original level.

HM Revenue & Customs and the Financial Services Authority have criticised the schemes in recent weeks.

The FSA urged investors to be "extremely cautious" about unlocking offers, while HMRC warned it could levy penalties of up to 70% of a fund if members unlawfully withdraw savings.

Dalriada Trustees independent trustee Brian Spence brought the action. He said the freezing order was an "important step forward in litigation commenced in an effort to protect members' interests".

Spence (pictured) said: "We believe that schemes of this sort have been marketed at people who - through no fault of their own - have not fully understood their import, and who do not realise that they could potentially be putting a substantial proportion of their pensions savings at risk."

McGrigors pensions partner Ian Gordon added: "Many of these so-called unlocking schemes test the boundaries of what is legal and effective, and everyone should be made fully aware of the risks."

Dalriada has set up dedicated help line for members of the affected schemes: 028 9041 2756.

Ark could not be reached for comment.