Posted 29th April 2022 by ctatax-admin
The answer to this question depends on a number of factors, not the least of which is exactly what the trustee has done, and their intent when it was done.
In cases such as the recent one covered by the BBC, whereby two trustees were jailed for a ‘scam’ which had defrauded millions of pounds from the pension savings of some 245 people, the reasoning is obvious and logical – these are trustees who have deliberately abused their position in order to obtain funds which have then been fraudulently distributed amongst themselves and others.
But what about when a Pension Trustee acts in a genuine fashion and still gets it wrong? What might the outcome be for you and your retirement plans? Here’s a few things you need to check in your to get that question answered:
This kind of ‘exoneration’ of the trustees means that in the event that they make an honest error which causes loss, that loss will be borne by the scheme itself.
Ultimately, like any major financial decision, investing in a pension scheme is not something to be done lightly. This is the cornerstone of your whole retirement plan, and you need to be satisfied that it forms a solid foundation for that plan. In our experience, pension errors are more common and generally far less sinister than you might imagine. One example we have discovered revolves around transfers of property into pension schemes, where lawyers have advised trustees in good faith that Stamp Duty is due because they assume that any property transfer requires this. What we know as tax advisers is that these sorts of transfer are often Stamp Duty exempt thanks to rules relating to connected parties. This is the sort of error that can cost a scheme thousands of pounds but may be recoverable directly from HMRC as a refund if caught in time, meaning that neither the scheme nor the trustees need worry about bearing the cost of such loss.
If you would like to know more about any of the issues raised in this article, please feel free to contact us