The Pensions Ombudsman (TPO) has ordered two trustees to repay £5.2m into pension schemes, after an investigation by its Pensions Dishonesty Unit (PDU) revealed that scheme funds were invested in breach of trustee investment duties.

The "extensive" investigation looked into three occupational pension schemes, the Eleven Property Pension Scheme, the SHK Property Services Pension Scheme and the Gilbert Trading Pension Scheme, a pension administration company, and the appointed trustees of the schemes, Simon Hamilton Kaigh and Michael McNally.

Complaints were raised with TPO after scheme members became concerned about a lack of information around investment performance, and an inability to take benefits from the schemes or transfer their funds, triggering an investigation by PDU.

This revealed that the scheme funds were invested in breach of trustee investment duties, in furtherance of a pension liberation arrangement and by trustees in a position of conflicting interests.

Some of the investments were in offshore companies with links to the individuals involved in the schemes and several of the investments were used as a conduit to facilitate pension liberation.

According to TPO, the investments overall were high risk, undiversified and were not made in the best financial interests of the members.

Through their involvement in the schemes, Kaigh and McNally were found to have acted dishonestly and have attracted personal liability, with around 117 members of these schemes thought to have been affected by the actions of the trustees.

In addition to this, an administrator of the scheme, Brambles Administration, was found liable as a dishonest assistant in respect of one of the breaches of trust.

In light of the findings, the deputy pensions ombudsman directed that over £5.2m be repaid by the trustees into the schemes for the benefit of the membership as a whole.

Kaigh and McNally were also directed to pay two of the applicants £6,000 each and three of the applicants £4,000 each in recognition of the "exceptional distress and inconvenience" each suffered.

The latest determination means that the PDU, which was launched in 2022, has now issued directions totalling more than £40m to be repaid into ten schemes.

Dominic Harris, Pensions Ombudsman, said: “This is another example of the important work of the Pensions Dishonesty Unit.

"Cases that the PDU investigate are complex and resource-intensive but, as well as the directions to repay schemes more than £40m in total, its work is also vital in raising people’s awareness of scams and holding those who act dishonestly accountable for their actions.”

This includes a number of higher profile cases, as the PDU previously issued directions to recover a total of nearly £13m after an investigation revealed multiple breaches of trust and acts of maladministration, as well as ordering a former sole trustee of the scheme and Chess Grandmaster to repay over £730,000 following a separate investigation.

More recently, it also ordered a former company director to repay over £9.7m into the Uniway Systems Limited Retirement Benefit Scheme and the Genwick Limited Retirement Benefit Scheme.

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