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Ploutos Pension Trust and Ganita Wealth Pension Scheme Determination Notice

Standard Procedure - Determination Notice under section 96(2)(d) of the Pensions Act 2004

The Pensions Regulator case ref: C59291233/1

Introduction

  1. The Determinations Panel (the Panel), on behalf of the Pensions Regulator (TPR), met on 12 May 2020 to decide whether to exercise a reserved regulatory function in relation to the issues in a Warning Notice dated 17 February 2020. The matter was referred to the Panel by the Case Team of TPR (the Case Team) on 1 April 2020 following a period allowed for representations.

Matters to be determined

  1. In the Warning Notice the Panel was asked to determine:

    i. whether to make an order pursuant to section 7(3)(b) of the Pensions Act 1995 (PA 95), to appoint an independent trustee (the New Trustee) to the Ploutos Pension Trust (PPT) in order to secure that the number of trustees is sufficient for the proper administration of the PPT Scheme; or alternatively, whether to make an order pursuant to sections 7(3)(a),(c) and/or (d) of PA 95, to appoint an independent trustee, that is, the proposed New Trustee to PPT and;

    ii. whether to make an order pursuant to section 7(3)(a),(c) and/or (d) of PA 95 to appoint an independent trustee (the New Trustee) to the Ganita Wealth Pension Scheme (GWPS), and;

    iii. in each case to make an order that:

    a. the appointed trustee’s fees and expenses in respect of PPT and GWPS be paid out of the resources of PPT and GWPS respectively pursuant to section 8(1)(b) PA 95, in the latter case to be treated for all purposes as a debt due from the employer Ganita Wealth Limited to the New Trustee pursuant to section 8(2) PA 95;

    b. the powers or duties of the appointed trustee be exercised to the exclusion of other trustees, under section 8(4)(b) of PA 95, and

    c. the vesting of any property of PPT and GWPS respectively, in, or transferring it to, the appointed trustee, under section 9 of PA 95

Directly affected parties

  1. The following are the parties identified by the Case Team, and agreed by the Panel, as being directly affected by the regulatory action sought in the Warning Notice:

    i. Aeon Capital Limited (ACL);

    ii. Ganita Wealth Limited (GWL);

    iii. Dalriada Trustees Limited (New Trustee).

Determination

  1. The Panel determined it reasonable to make an order appointing the New Trustee to PPT in order to secure that the number of trustees is sufficient for the proper administration of PPT pursuant to section 7(3)(b) PA 95. In the event that there is already a validly appointed trustee to PPT, the Panel determined that it is reasonable to make an order appointing the New Trustee to PPT pursuant to sections 7(3)(a), (c) and/or (d) PA 95 because there is a demonstrable lack of trustee knowledge and understanding properly to administer PPT, because an appointment is reasonable to secure the scheme assets, and because it is in the interests of the generality of members of PPT to do so.

  2. The Panel also determined that it is reasonable to appoint the New Trustee to GWPS as the Panel is satisfied that the current trustee, ACL, lacks the knowledge and understanding properly to administer GWPS, an appointment will secure GWPS assets, and because it is in the interests of the generality of members of GWPS to do so.

Factual background

The Ploutos Pension Trust

  1. PPT was established on 13 November 2014 as a defined contribution occupational pension scheme and as at 17 February 2015, it had 2 members. A valuation of scheme assets updated on 27 May 2016 indicated assets of £169,991.00 on 17 December 2015. By a response to a request from TPR dated 28 February 2017, PPT assets are said to amount to £591,726.40 and the membership to have increased to 25.

PPT – Trustee

  1. Knight Gray Limited, incorporated on 27 October 2014, was appointed as trustee of PPT on 13 November 2014. On 13 December 2016 it was dissolved. Prior to dissolution its director was Mr Houston Robertson who was appointed as director on 29 April 2016. (Two previous directors both resigned on 29 April 2016, the same day Mr Roberston was appointed.)

  2. Despite the dissolution of Knight Gray Limited on 13 December 2016, TPR’s records continue to show Knight Gray Limited as trustee of PPT and TPR has received no update to its records since the dissolution.

  3. On 21 December 2017 and in response to a statutory request for information under section 72 of PA 04 from TPR to PPT, Mr Dhugal Robertson advised that KnightG Limited (Company Number 10932893) was the trustee of PPT. As no documentary evidence was provided to support this information and TPR’s records have not been updated, the validity of the information and the purported appointment is unknown.

  4. KnightG Limited was incorporated on 25 August 2017 and was dissolved on 29 January 2019. The sole director of KnightG Limited was Mr Houston Robertson who was appointed as a director from incorporation. There were never any other directors. As noted above, Mr Houston Robertson was previously also a director of Knight Gray Limited, PPT’s former trustee.

  5. In line with TPR’s standard practice for schemes recorded on TPR’s database, TPR sent a notification on 26 October 2018 to PPT at the address listed in TPR’s records to remind it to complete PPT’s scheme return. No scheme return was ever provided and the reminder itself was returned to TPR with a comment stating “Gone Away”.

PPT – Employer

  1. Employer Admin Services Limited (EASL) incorporated on 9 October 2014 is listed with TPR as the principal employer of PPT. Mr Dhugal Robertson (Mr Robertson) was the sole director and is also the sole shareholder. EASL was dissolved on 30 January 2018 after this was initiated by the Registrar of Companies. TPR’s records continue to show that EASL is the principal employer for PPT as TPR has received no update to that information. On 17 June 2015 on a (now defunct) website EASL was referred to as PPT’s “transfer administrator”.

PPT – Scheme Administrator

  1. According to information in TPR’s records, the first scheme administrator for PPT was Gallium Fund Solutions Limited (Gallium) from 14 October 2015. The now defunct website for PPT as at 17 June 2015 indicates that Gallium was the scheme’s “Investment Manager” which accords with the description of Gallium in the Trust Deed and Rules for PPT. Subsequently, information from TPR’s database shows that from 27 May 2016, the scheme administrator for PPT changed to Masons Pension Administration Limited (Masons).

  2. In February 2017, Masons wrote to the trustees of all the schemes for which it was the pension administrator and informed them that it had been de-registered as a pension administrator by HMRC. Section 270 of the Finance Act 2004 (FA 04) requires all schemes to have a scheme administrator in order to retain their tax registration status. Masons was also dissolved by the Registrar of Companies on 10 October 2017. Again this change does not appear to have been notified to TPR.

PPT – HMRC de-registration

  1. In August 2017 PPT was de-registered by HMRC. (This was confirmed to the Case team by HMRC in January 2018). Following de-registration a charge of 40% of the value of the PPT’s assets (£959,127.45) at that date was issued by HMRC to PPT, and also to EASL as the scheme establisher pursuant to section 272(4) of FA 04. The charge was not paid and EASL has since been dissolved (30 January 2018).

The executed “transfer deeds” dated 31 August 2017

  1. After PPT’s de-registration by HMRC there was a purported bulk transfer of members and their assets from PPT to GWPS by an “executed transfer deed” dated 31 August 2017 (the transfer deed). The transfer deed included the wording “The Trustees and administrators of Ganita Wealth Pension Scheme do not, and will not, accept any liability from the previous administration of the Scheme” attempting to exclude all liabilities from transferring across to GWPS.

  2. The Case Team understands that the transfer deed also sought to implement a bulk transfer without evidence of either member consent having been obtained or compliance with the specific statutory conditions for a bulk transfer without consent. It failed to cite the correct powers under the schemes’ Trust, Deed and Rules, for either the transfer out by PPT or the receipt of the transfer by GWPS.

  3. The transfer deed was signed in respect of PPT by Mr Houston Robertson, apparently on behalf of an entity called Knight Ltd, and by Mr Robertson on behalf of the employer, EASL. Whilst Mr Houston Robertson was a director of Knight Gray Limited and KnightG Limited, there is no evidence in TPR’s records that any of the Knight companies were at that time validly appointed as trustee for PPT. The transfer deed was also signed on behalf of GWPS by ACL and its sponsoring employer, GWL.

  4. The Case Team was concerned that the transfer did not meet or comply with various statutory requirements for such a transfer and in particular the apparent lack of member consent. In the Case Team’s view it was an attempt to avoid the de-registration charge of 40% of £959,127.45 that had been levied against PPT. (The Case Team also had concerns that there had been a failure to comply with section 62 of PA 04 in updating TPR’s scheme records.)

  5. Whether or not the purported transfer of members from PPT to GWPS was effective, a cash transfer of £43,656.40 from PPT to GWPS was made on 7 September 2017.

The Ganita Wealth Pension Scheme (GWPS)

  1. GWPS was established on 19 December 2016 as a defined contribution occupational pension scheme. It remains open but according to TPR’s records, has no active members and appears to have no assets.

GWPS – Employer

  1. No employer is listed on TPR’s records in relation to GWPS. The Scheme Trust Deeds and Rules define GWL as ‘the Provider’. A representative of GWL advised the Case Team in December 2017 that the company, GWL, was the sponsoring employer for GWPS.

  2. Companies House records that GWL was incorporated on 21 August 2012 and its directors are Bijesh Babu appointed on 21 August 2012 and Sukumaran Rajesh appointed on 6 April 2018.

  3. As indicated above a transfer deed was executed on 31 August 2017 to transfer the members and assets from PPT to GWPS but explicitly not any PPT liabilities. There was a cash transfer of PPT scheme funds of £43,656.40 to GWPS on 7 September 2017.

GWPS – Trustee

  1. No trustee for GWPS is recorded with TPR. However in a meeting between TPR and Bibesh Babu (GWL), Mr Kahlam (ACL) and representatives of Bluesky Pensions (a pension scheme administrator since renamed ‘Evolve’ (Evolve)) on 7 December 2017 (the December Meeting) TPR was informed that ACL had been the sole trustee since October 2016. Companies House records indicate that ACL was incorporated on 24 August 2016 and has one sole director, Mr Arvinder Singh Kahlam (Mr Kahlam), appointed on 25 August 2016.

  2. £33,700 of the amount transferred to GWPS from PPT was invested in Ganita Wealth Fund (GWF), a separate investment fund marketed by GWL. There is no evidence that any investment advice was obtained, or taken into account, by ACL prior to the investment.

GWPS - Scheme Administrator

  1. TPR’s database does not list an administrator for GWPS. On 1 May 2018 Alison Barnes from Evolve contacted the Case Team to inform them that Evolve had been appointed as scheme administrator of GWPS. The Case Team asked for details of this appointment along with documentation, which was never received. A submission from Pinsent Masons, legal adviser to GWL, dated 31 May 2018 stated that there was an intention to appoint Evolve “at the point when the Scheme first admits members and holds assets” which appeared to conflict with the earlier information provided by Evolve.

  2. At the time of the Warning Notice no other evidence that Evolve has been appointed has been provided nor has any update been made to TPR’s database.

Background to the Case Team’s request

  1. Following notification by HMRC in January 2017 of the proposed de- registration of PPT the Case Team was contacted by Mr Richard Bohan, a director of Masons, who indicated that he would be taking steps to rectify the de-registration. On 8 February 2017 the Case Team was contacted by Mr Dhugal Robertson who advised that it was intended to replace Masons. Despite the stated intention to replace the scheme administrator and to appeal the proposed de-registration, the de- registration went ahead in August 2017, as HMRC later confirmed to TPR in its letter dated 22 January 2018.

  2. On 16 February 2017 the Case Team issued a statutory notice under section 72 PA 04 to Mr Robertson to elicit information about PPT’s governance. There followed a series of communications between the Case Team and Mr Robertson in which some information was provided in response to the statutory request.

  3. On 14 November 2017 due to concerns about the status and effectiveness of the transfer deed, GWPS’ governance, and the lack of due diligence undertaken by ACL before accepting the transfer of members and assets from PPT, the Case Team issued another section 72 notice to GWL. A response was provided on 23 November 2017.

  4. Following this response, the December Meeting referred to above was convened. The Case Team noted that throughout the meeting Mr Kahlam of ACL was silent even when matters of the trusteeship of GWPS were being discussed. The Case Team highlighted the importance of GWPS obtaining independent pensions advice. The Case Team understood that Mr Babu of GWL and Mr Kahlam agreed to take such advice.

  5. On 31 May 2018, Pinsent Masons (legal adviser to GWL) contacted the Case Team with a submission in relation to GWPS (the Submission). The Submission stated that a new unnamed corporate trustee and three new trustee directors would be appointed to GWPS with effect from 18 June 2018. The Submission stated that it was intended that the new unnamed corporate trustee would replace ACL.

  6. The December Meeting did nothing to assuage the Case Team’s concerns regarding the transfer deed or any trustee’s knowledge and understanding to effect such a transfer legitimately. At the December Meeting, for example, it was admitted that Mr Kahlam had acted on the instructions of Mr Babu and an unnamed third party to transfer funds out of GWPS, neither of whom are trustees of GWPS.

  7. Mr Babu further claimed that the ‘transfer deed’ was subject to a letter sent to HMRC dated 4 October 2017 effectively seeking their approval of the transfer. However, the Case Team noted that the transfer deed was dated and executed prior to the date of the letter to HMRC.

  8. The purported transfer deed led to the Case Team having the following concerns:

    i. The deed shows the involvement of an entity called Knight Ltd along with EASL, GWL and ACL;

    ii. There is no evidence that an entity called Knight Ltd ever existed and there is no such company registered with Companies House;

    iii. There is no evidence that Knight Ltd has the authority to sign on behalf of PPT given there is no evidence confirming that it was validly appointed as a trustee of PPT;

    iv. No party connected to PPT ever claimed that an entity called Knight Ltd had ever been appointed as a trustee of PPT;

    v. The trustee of GWPS confirmed that no legal advice was obtained before entering into the transfer deed;

    vi. The transfer deed does not refer to, or comply with, the relevant powers under the respective Trust Deed and Rules for PPT or GWPS nor the pensions legislation which would allow such a bulk transfer to take place;

    vii. The Trust Deed and Rules for PPT do not provide the trustee of the scheme with the power to make a bulk transfer out of the scheme without the consent of the members. While it is accepted that the Trust Deed and Rules allow for transfers in respect of members on a piecemeal basis where all the necessary preservation requirements (i.e. member consent) are met, there is no evidence that such a power exists in respect of a bulk transfer as envisaged by the transfer deed;

    viii. It would also appear that the Trust Deed and Rules for GWPS, do not entitle ACL to accept a bulk transfer into GWPS which is what purportedly happened;

    ix. The wording of the transfer deed does not explain how it is legally possible to transfer all assets and all members but expressly to exclude “the liability from the previous administration of [PPT]”.

Undertakings given and submissions made by GWL/GWPS

  1. In the Submission “on behalf of Ganita Wealth in relation to the Ganita Wealth Pension Scheme”, the following was stated:

    “This note follows previous correspondence between Ganita Wealth Limited (Ganita) and the Pensions Regulator in relation to the Ganita Wealth Pension Scheme (the Scheme)”.
    …
    “Ganita committed to give an undertaking to the Regulator which would include Ganita's confirmation that:

    1.1.1. There were no members in the Scheme.

    1.1.2. No new members would be accepted to the Scheme.

    1.1.3 No new employers would be invited or accepted to join as participating employers to the Scheme (subject to any master trust authorisation that may be secured in the future).

    Ganita gave this undertaking on 22 March 2018”.

  2. The Submission contained other information regarding the intentions of GWL towards GWPS including:

    i. An acknowledgement of TPR’s concerns and the “weakness in [GWPS] former governance structure”;

    ii. The wish to continue to run GWPS and keep it open to employees of GWL;

    iii. The fact that GWL was working with Evolve and Pinsent Masons both “well regarded and experienced advisers to DC schemes;”

    iv. That GWPS would not operate as a master trust for the purposes of the Pension Schemes Act 2017 (PSA 17) and would not be used as such until authorisation was sought but that there was no intention to seek authorisation at that time;

    v. Asking TPR to review its proposals (see paragraph 39 below) and confirm GWL can continue “running” GWPS. It asked for TPR confirmation by the end of June 2018.

  3. The Submission also went on to state that certain proposals were being considered namely: 

    a) the appointment of a new trustee company with new trustee directors with effect from 18 June 2018; 

    b) the appointment of Evolve as administrator to GWPS, and subject to TPR approval - GWL, the trustees, and Evolve would move ahead to agree “detailed appointment terms”; 

    c) GWL and Evolve were working on a draft Service agreement. It was also stated that GWPS’s Trust Deed and Rules would be revised to restrict membership to employees of GWL only.

  4. By various email exchanges the Case Team informed GWL that it was not able to approve the appointment of an administrator or other person or entity to GWPS or to provide advice. The Case Team asked GWL to procure its own independent advice.

  5. On 22 January 2019 the Case Team met Pinsent Masons and sought to clarify the status of the PPT assets that had been transferred to GWPS. The Case Team was told that GWPS had attempted to return the £43,656.40 transferred to GWPS from PPT, but that PPT had not replied to its attempt to do so. At this meeting it was accepted that there was some doubt as to the validity of the transfer deed and ACL’s knowledge and understanding in signing it. Finally, Pinsent Masons reiterated that GWL wanted to return the PPT funds still being held by GWF, resolve the issues and wind up the scheme.

The Case Team’s arguments for exercising the power

  1. TPR issued a Warning Notice on 14 February 2020.

(1) PPT

  1. As regards PPT, the Warning Notice asks the Panel to appoint an independent trustee either because no trustee has been validly appointed, or if one has been so appointed, to (i) ensure that the trustee of the scheme has or exercises the necessary knowledge and skill for the proper administration of the scheme, (ii) in order to protect the scheme assets and/or (iii) otherwise to protect the interests of members.

  2. The Case Team argues that whilst it is not clear which of Knight Gray Limited, KnightG Limited or Knight Limited was acting, or purporting to act as trustee, it (and Mr H Robertson) lacked sufficient trustee knowledge and understanding to act as trustee of PPT. The Case Team lists examples as follows:

    i. the failure to take steps to ensure that an administrator was appointed to replace Masons resulting in HMRC’s de-registration of PPT;

    ii. the failure to take adequate steps to resolve the situation that PPT found itself in – both in terms of preventing de-registration or at the very least, mitigating the impact of that de-registration on PPT members;

    iii. the failure to take advice and complete basic due diligence before executing the “transfer” deed with GWPS;

    iv. the failure to take advice before the cash transfer to GWPS of £43,656.40 for investment in GWF;

    v. the failure to recognise a potential conflict in investing in the same entity, GWF, who was said to be the scheme’s “investment manager” and,

    vi. the failure to update TPR’s records for PPT.

  3. As regards the de-registration, the Case Team’s position is that this could have been avoided by appointing a new scheme administrator. Alternatively the potential impact on PPT members could have been mitigated by transferring members and assets to another registered scheme.

  4. Neither of these options took place before PPT’s de-registration. The Case Team notes that Knight Gray Limited (the former trustee of PPT) was dissolved in December 2016 before HMRC made its first notification of de-registration of PPT. Further, KnightG Limited (which was claimed to have become a trustee of PPT) was not incorporated until after PPT was de-registered. It therefore appears that no trustee was appointed to PPT during the period when HMRC began the process of de-registration and the actual de-registration of PPT on 9 August 2017. EASL was still in existence during that period and had the authority to appoint a trustee to PPT during the time it claimed to be appealing HMRC’s de-registration of PPT and indicating it was going to appoint GWL as the new administrator.

  5. Even though PPT has been de-registered, the Case Team submits that the appointment of a trustee to PPT is still needed in order to ensure the proper administration of PPT going forward, including possibly winding up PPT.

  6. Finally, the Case Team understands that funds have not been returned to PPT because there was no evidence that PPT has a legally appointed trustee capable of receiving the funds. This is a further reason why an independent trustee needs to be appointed.

  7. For these reasons the Case Team submits that the appointment of an independent trustee is reasonable in order to secure the proper use of any scheme assets and to otherwise protect the interests of the members of PPT.

  8. The Case Team submits that any independent trustee appointed to PPT should have exclusive powers. Further, pursuant to section 8 of PA 95 the Case Team submits that it is reasonable to order that any fees and expenses of a new independent trustee be paid out of the resources of PPT.

(2) GWPS

  1. The Case Team submits that under section 7(3)(a), (c) and/or (d) PA 95 it is reasonable to appoint a new independent trustee for GWPS having regard to the following:

    (i) ACL lacks sufficient trustee knowledge and understanding to enable it to continue to act as trustee of GWPS. In particular, Mr Kahlam, as sole director of ACL:

    a. was unable to answer even basic questions about GWPS at the December Meeting with the Case Team or evidence any active or effective trusteeship of GWPS;

    b. failed to take advice and complete basic due diligence before executing a “transfer deed” with PPT;

    c. apparently acted on the advice of the employer director (Mr Babu) to transfer £33,700 out of the scheme into GWF without obtaining legal advice;

    d. failed to update TPR’s records for GWPS as required by section 62 of PA 04 to reflect the appointment of ACL and;

    e. failed to comply with the assurances made in the Submission including the promise to return the money transferred from PPT.

    (ii) an independent trustee will ensure that any GWPS assets are secured and;

    (iii) it is reasonable to appoint an independent trustee in order to protect the interests of the members of GWPS such as there may be now or in the future.

  2. In support of its request for an independent trustee the Case Team points out that Mr Babu of GWL, and not ACL, claimed to have sought HMRC approval for the transfer deed by letter dated 4 October 2017, which is undermined by the fact that the date is some time after the transfer deed was actually executed. Mr Babu admitted that he had instructed Mr Khalam to transfer GWPS assets into GWF, and Mr Kahlam acted on those instructions without more, which is not what would be expected of a trustee with an appropriate level of skill.

  3. The Case Team asks that the appointment of the independent trustee should be with exclusive powers given that any trustee that is appointed appears to lack the necessary trustee knowledge and understanding to act in that capacity.

  4. Finally, the Case Team submits that pursuant to section 8 PA 95 it is reasonable to order that any fees and expenses of a new independent trustee be paid out of the resources of GWPS and such expenses be treated for all purposes as a debt due from GWL to the independent trustee.

Representations

  1. No Representations in response to the Warning Notice were received from either the trustee of PPT, if there is one, or ACL the trustee for GWPS.

  2. On 4 March 2020 Pinsent Masons acting on behalf of GWL provided a response welcoming the appointment of an independent trustee to GWPS. On 16 March 2020 Dalriada responded to say they did not intend to make representations regarding their proposed appointment to either scheme.

  3. No other representations have been made to the Determinations Panel.

The Law

  1. TPR has the power under section 7(3) PA 95, subject to section 100 of PA 04, to appoint a trustee to a trust scheme. TPR may appoint a trustee (i.e. the New Trustee) where it is satisfied that it is reasonable to do so in order:

    i. to secure that the trustees as a whole have, or exercise, the necessary knowledge and skill for the proper administration of the scheme (section 7(3)(a));

    ii. to secure that the number of trustees is sufficient for the proper administration of the scheme (section 7(3)(b));

    iii. to secure the proper use or application of the assets of the scheme (section 7(3)(c)); and/or

    iv. otherwise to protect the interests of the generality of the members of the scheme (section 7(3)(d)).

  2. TPR also has the following powers under:

    i. section 8(1) PA 95 to order that any fees or expenses of the New Trustee are to be paid by the sponsoring employer of the particular scheme, or out of the resources of the scheme, or partly by the employer and partly out of those resources;

    ii. section 8(2) PA 95 to order that an amount equal to any fees or expenses of the New Trustee which are paid out of the resources of the scheme is to be treated for all purposes as a debt due from the employer to the New Trustee;

    iii. section 8(4)(b) PA 95 to make provision for the powers or duties to be exercisable by the New Trustee to the exclusion of other trustees.

  3. The statutory regime requires trustees to be conversant with key documents including the trust deed and rules, the statement of investment principles and any other document recording policy adopted for the scheme’s administration.

  4. A corporate trustee must secure that each individual who exercises any function which the company has as trustee of the scheme, is conversant with each of the scheme documents set out in the legislation (such as the Scheme’s Trust Deed and Rules, its Statement of Investment Principles) in so far as it is relevant to the exercise of the function. Likewise such individuals must also have knowledge and understanding of the law relating to pensions and trusts and the principles relating to the investment of assets. The standard of knowledge and understanding required of trustees is set out in sections 247 – 249 PA 04 as being that appropriate for the purposes of enabling the individual properly to exercise his or her functions on behalf of the coporate trustee.

  5. Further, section 36 PA 95 requires trustees to obtain and consider “proper advice” prior to the investment of scheme funds, and requires such advice to be evidenced in writing.

  6. As well as statutory duties, trustees of a pension scheme also owe common law duties to the members of the scheme as beneficiaries under a trust. A trustee has a duty to promote the purpose for which the trust was created. In the pensions context, it is generally accepted that this will require the trustee to act in the best financial interests of the members of a scheme, and not to prefer the interests of third parties to those of the members (and other beneficiaries) of the scheme.

Reasons for decision: Appointment of a trustee

  1. In making its decision the Panel had regard to the objectives of TPR as set out in section 5 PA 04 and to the matters listed in section 100 PA 04.

  2. The Panel was satisfied that it was reasonable to appoint an independent trustee to both schemes. In relation to PPT, the Panel considered it reasonable to appoint an independent trustee pursuant to section 7(3)(b) but also under section 7(3)(a), (c) and (d).

  3. In relation to GWPS the Panel considered it reasonable to appoint an independent trustee pursuant to section 7(3)(a),(c) and (d).

  4. Taking each in turn:

PPT to secure the number of trustees is sufficient for the proper administration of the scheme

  1. The Panel considered that on the balance of probabilities there is no validly appointed trustee currently in place for PPT. It is therefore reasonable to appoint the proposed New Trustee as requested in the Warning Notice.

  2. In particular, the Panel noted that there have been no updates or changes made to the registrable information with TPR as required under section 62(2) and (4) PA 04. The trustee recorded with TPR, Knight Gray Limited, was dissolved on 13 December 2016 and the sponsoring employer, EASL, dissolved on 30 January 2018. The Panel noted that Mr Dhugal Robertson in a response to TPR dated 21 December 2017 had stated that KnightG Limited (company number 10932893) had been appointed trustee of PPT in October 2016. However, no evidence to support the valid appointment of this company has been provided nor any changes notified to TPR at the time.

  3. In these circumstances, it was reasonable to appoint an independent trustee with exclusive powers under section 7(3)(b) in order to give certainty for PPT.

  4. In the event that there is a validly appointed trustee in place for PPT, the Panel considered that it was still reasonable to appoint the proposed New Trustee under section 7(3)(a), (c) and (d) to secure the proper administration of the scheme, to secure the proper use or application of the assets of PPT, or otherwise to protect the interests of the generality of members of PPT.

  5. The Panel reached this view given that the evidence points cumulatively to a severe lack of trustee knowledge and understanding in the following actions that took place:

    i. the failure to act effectively in response to the notification of de- registration by HMRC and to mitigate or comply with the de- registration charge;

    ii. the failure to secure the appointment of a scheme administrator as required under section 270 FA 04;

    iii. the signing of the ‘transfer deed’ dated 31 August 2017 which was not in accordance with the trustee’s powers under the PPT trust deed and rules. In particular, the transfer deed did not explain how funds and assets could be transferred without member consent, and there is no evidence that any advice was obtained prior to executing the document;

    iv. the transfer of funds out of the scheme further to the defective “transfer deed” and before any members had actually transferred to GWPS;

    v. the failure over more than three years to regularise the scheme’s position;

    vi. the failure to update TPR records as required by section 62 PA 04 relating to the current trustee of the scheme.

  6. The Panel notes the charge of 40% of scheme assets valued at £959,127.45 issued by HMRC on de-registration of PPT was never paid, and that the drafting of the “transfer deed” may have been an attempt to avoid transferring the charge to GWPS as the Case Team alleges.

  7. The Panel further determined that:

    i. the New Trustee’s fees and expenses in respect of PPT be paid out of resources of PPT pursuant to section 8(1)(b) of PA 95,

    ii. the powers or duties of New Trustee be exercised to the exclusion of other trustees, under section 8(4)(b) of PA 95, and;

    iii. the vesting of any property of PPT in, or transferring it to, the New Trustee, under section 9 of PA 95.

GWPS

  1. Whilst there appears to be a trustee in place for GWPS, in ACL, the Panel noted the lack of any evidence to support the valid appointment of ACL. The Panel was satisfied that it was reasonable to appoint an independent trustee in order to ensure that the trustees have, and exercise the knowledge and skill for the proper administration of GWPS, including compliance with pensions legislation and to secure the proper use or application of GWPS’s assets, and otherwise to protect the interests of the generality of the scheme’s members.

  2. In particular, the Panel found that ACL:

    i. failed to seek professional advice even after the Case Team had pointed out both the statutory requirements and the need to confirm that it was in the members’ best interests to accept the transfer of PPT members and PPT scheme assets to GWPS;

    ii. failed to carry out any or proper due diligence before accepting the proposed transfer of members and assets from PPT;

    iii. failed to take proper advice in relation to the transfer of scheme funds to GWF;

    iv. failed to secure any of the actions promised in the Submission of 31 May 2018 and the undertakings reiterated within it, in particular, to secure a new administrator, to appoint a new trustee company and new trustee directors by 18 June 2018;

    v. failed to appoint an independent trustee despite the acknowledgement that such appointment was in the best interests of GWPS. No such trustee has to date been appointed and no explanation provided as to why that did not happen.

  3. Although the Case Team appeared to be alleging that failing to notify the change in or loss of a scheme administrator was also a breach of section 62 PA 04, the Panel was not satisfied that a change in administrator is “registrable information” within the meaning of section 60 PA 04. However, the Panel accepts there was a failure to update TPR records in respect of the appointment of ACL, in breach of section 62 PA 04.

  4. The Panel was satisfied that the purported investment in GWF of nearly all of the money transferred from PPT, (£33,700 of £43,656.40) at the behest of the employer (via Mr Babu) and without being able to show that any, or proper, investment advice had been obtained, gave rise to concern as to the knowledge and understanding, as required by sections 248-249 PA 04, of the trustee, ACL, and Mr Kahlam, its sole director. Further it appeared to be a breach of section 36(3), 36(6) and 36(7) PA 95, requiring trustees to obtain and to consider, “proper advice”, on the suitability of investments which advice should be in writing.

  5. The Panel was satisfied that Mr Kahlam, as the sole trustee director, did not have the requisite degree of knowledge and understanding of the law relating to pensions and trusts and of the principles relating to investment of scheme assets appropriate for his role as director of a corporate trustee (and as required by section 248 PA 04). The failures of ACL/Mr Kahlam in making the investment, and breaching scheme governance requirements all demonstrated to the Panel (both individually and in combination with each other) the lack of sufficient trustee knowledge and understanding.

  6. For all the reasons outlined above, the Panel was satisfied that it was reasonable to appoint a new trustee to GWPS in order:

    i. to secure that the trustees as a whole have, or exercise, the necessary knowledge and skill for the proper administration of the scheme pursuant to section 7(3)(a) PA 95;

    ii. to secure the proper use or application of the assets of the scheme pursuant to section 7(3)(c) PA 95; and

    iii. otherwise to protect the interests of the generality of the members of the scheme pursuant to section 7(3)(d) PA 95.

Conclusion

  1. In respect of both the PPT and GWPS, the Panel was satisfied that the various failures identified had not been adequately addressed over a significant period of time and in spite of assurances that they would be resolved. Moreover, the assurances provided had inevitably delayed the issues being properly addressed by TPR. The apparent unwillingness or inability to address the issues identified, and the lack of proper engagement with TPR, demonstrated systemic failures justifying the appointment of an independent trustee.

  2. The Warning Notice stated that Dalriada Trustees Ltd is proposed as the independent trustee following a selection process. The Directly Affected Parties raised no objections to the proposed independent trustee and the Panel had no objections. The Panel therefore accepted that Dalriada Trustees Ltd be appointed as the independent trustee to both PPT and GWPS.

  3. Given the inability of ACL and any validly appointed trustee of PPT to address the issues raised by TPR over a significant period of time, the Panel concluded that it was appropriate that the independent trustee appointment is to the exclusion of the current trustees.

Consequential directions and provisions

  1. The Panel considered it appropriate that orders be made, pursuant to section 8(2) of PA 95, that the fees of the independent trustee be met out of the resources of the schemes.

  2. Finally it considered whether to order that the property of the schemes should vest in Dalriada as trustee of the schemes under section 9 of PA 95. The Panel decided it was appropriate in all the circumstances to make that order.

  3. For these reasons the Panel determined that orders be made in the following terms:

Ploutos Pension Trust:

(1) Dalriada Trustees Limited (the New Trustee) is hereby appointed as trustee of the Ploutos Pension Trust (the Scheme), with immediate effect.

(2) The order at (1) is made because TPR is satisfied that it is reasonable to do so pursuant to the relevant provisions of section 7(3) of the PA 95 as set out below, in order:

i. to secure that the trustees as a whole have, or exercise, the necessary knowledge and skill for the proper administration of the Scheme pursuant to section 7(3)(a),

ii. to secure that the number of trustees is sufficient for the proper administration of the scheme pursuant to section 7(3)(b),

iii. to secure the proper use or application of the assets of the Scheme pursuant to section 7(3)(c), and

iv. to protect the interests of the generality of the members of the Scheme pursuant to section 7(3)(d).

(3) The powers and duties exercisable by the New Trustee shall, until further order, be to the exclusion of all other trustees of the Scheme pursuant to section 8(4)(b) of the PA 95.

(4) The New Trustee’s fees and expenses in respect of the Scheme shall be paid out of the resources of the Scheme pursuant to section 8(1)(b) of the PA 95.

(5) Pursuant to section 9 of the PA 95, it is hereby ordered that all property and assets of the Scheme, heritable, moveable, real and personal, of every description and wherever situated and all rights pertaining to that property be vested in, assigned to and transferred to, the New Trustee as trustee of the Scheme.

(6) The appointment of the New Trustee may be terminated, or the New Trustee replaced, at the expiration of 28 days’ notice from TPR to the New Trustee, pursuant to section 7(5)(c) of the PA 95 and such power to terminate or replace the appointment shall be exercised by TPR in accordance with its delegation policy.”

Ganita Wealth Pension Scheme:

(1) Dalriada Trustees Limited (the New Trustee) is hereby appointed as trustee of the Ganita Wealth Pension Scheme (the Scheme), with immediate effect.

(2) The order at (1) is made because TPR is satisfied that it is reasonable to do so pursuant to the relevant provisions of section 7(3) of the PA 95 as set out below, in order:

i. to secure that the trustees as a whole have, or exercise, the necessary knowledge and skill for the proper administration of the Scheme pursuant to section 7(3)(a),

ii. to secure the proper use or application of the assets of the Scheme pursuant to section 7(3)(c), and

iii. to protect the interests of the generality of the members of the Scheme pursuant to section 7(3)(d).

(3) The powers and duties exercisable by the New Trustee shall, until further order, be to the exclusion of all other trustees of the Scheme pursuant to section 8(4)(b) of the PA 95.

(4) The New Trustee’s fees and expenses in respect of the Scheme shall be paid out of the resources of the Scheme pursuant to section 8(1)(b) of the PA 95 and an amount equal to the amount (if any) paid out of resources of the Scheme by virtue of section 8(1)(b) is to be treated for all purposes as a debt due from the employer Ganita Wealth Limited to the New Trustee, pursuant to section 8(2) of the PA 95.

(5) Pursuant to section 9 of the Pensions Act 1995, it is hereby ordered that all property and assets of the Scheme, heritable, moveable, real and personal, of every description and wherever situated and all rights pertaining to that property be vested in, assigned to and transferred to, the New Trustee as trustee of the Scheme.

(6) The appointment of the New Trustee may be terminated, or the New Trustee replaced, at the expiration of 28 days’ notice from TPR to the New Trustee, pursuant to section 7(5)(c) of the PA 95 and such power to terminate or replace the appointment shall be exercised by TPR in accordance with its delegation policy.”

  1. Although the Panel has, for convenience, issued one Determination Notice in respect of Ploutos Pension Trust and Ganita Wealth Pension Scheme, the Panel has reached a separate determination in respect of each of the schemes.

  2. Appendix 1 to this Determination Notice contains important information about the Directly Affected Parties’ rights to refer this decision to the Upper Tribunal.


    Signed:
    Name: Antony Townsend 
    Dated: 10 June 2020
    (Revised on 5 August 2020)

Appendix 1

Referral to the Tax and Chancery Chamber of the Upper Tribunal

You have the right to refer the matter to which this Determination Notice relates to the Tax and Chancery Chamber of the Upper Tribunal (the Tribunal). You have 28 days from the date this Determination Notice is sent to you to refer the matter to the Tribunal or such other period as specified in the Tribunal rules or as the Tribunal may allow. A reference to the Tribunal is made by way of a written notice signed by you and filed with a copy of this Determination Notice.

The Tribunal’s address is:

Upper Tribunal
(Tax and Chancery Chamber) Fifth Floor
Rolls Building
Fetter Lane
London EC4A 1NL

Tel: 020 7612 9700

The detailed procedures for making a reference to the Tribunal are contained in Section 103 of PA 04 and the Tribunal Rules.

You should note that the Tribunal rules provide that at the same time as filing a reference notice with the Tribunal, you must send a copy of the reference notice to TPR. Any copy reference notice should be sent to:

Determinations Panel Support
The Pensions Regulator 
Napier House
Trafalgar Place
Brighton
BN1 4DW

Tel: 01273 811852

A copy of the form for making a reference, FTC3 ‘Reference Notice (Financial Services)’ can be found on the GOV.UK website.

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