Former Worthington Employee Pension Top Up Scheme trustee, Stephen Smith, has been given a 10-month jail term, suspended for 12 months, after admitting to using scheme funds to make five prohibited loans to entities connected to the scheme’s sponsoring employer.

At his sentencing at Burnley Crown Court, Judge Unsworth KC told Smith he would also have to complete 150 hours of unpaid work in the community and pay £1,000 in prosecution costs.

The judge stated: “Any mismanagement of pension schemes has the potential to cause real harm to people, many of whom will have sought to rely on those investments to keep them in later life.

"Mismanagement of schemes undermines public trust in the pension system in general."

Smith previously pleaded guilty to making five prohibited loans totalling around £700,000, but pleaded not guilty to a sixth charge of making a prohibited investment.

During a prosecution by The Pensions Regulator (TPR), the court heard that Smith played a central role in running the scheme but failed to act in the best interests of its beneficiaries or with impartiality and was negligent in the performance of his trustee duties.

TPR also confirmed that although Smith was not a trustee at the time of the failed investment, ultimately all scheme monies were lost as the loans were converted into another employer- related investment that failed.

Commenting on the prosecution, TPR executive director of frontline regulation, Nicola Parish, stated: “Rules restricting trustees from lending scheme money to a sponsoring employer are there to safeguard workers’ pension pots.

“Smith chose to flout these rules and, as this prosecution shows, we will take tough action to punish those who risk the pension funds they are entrusted to look after.”

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