Some long awaited information, still no results

Dear Mr Nichols

Thank you for your email below.

I am pleased to answer your points as follows:

Member communication

I am aware of the requirements you have referred to from the TPAS website. We will be making an announcement to all members of the scheme in the next 10 days or so. This will cover all the required content.

Regulator Report

We are in the process of preparing the first wind-up report to the Regulator and this will be submitted shortly.

Other questions

In terms of the numbered paragraphs, rather than address each point individually, I am setting out some of the key points I made in a conversation with Steve Riley last week which I imagine you may be aware of already as these address all the issues you raise:

1. My view was that this was going to be a quick and easy wind-up exercise. Factors influencing my view included the following: (a) there had only ever been one company participating in the scheme; (b) the scheme was contracted-in to the state second pension (formerly known as SERPS); (c) L&G had always been the administrator of the scheme. There was no sign of the normal wind-up delaying factors such as having to agree contracted-out benefits with the National Insurance Contributions Office (which is normally the single biggest piece of work involved in a scheme wind-up). I made the tactical decision that L&G should continue in post as administrators of the scheme through the wind-up (why would I move from the people who knew the scheme inside out?).

2. We promptly moved to secure members' benefits with Aegon. This was concluded in January 2009. The annuity rate for the contract was fixed at that date. We also secured and documented a formal guarantee from the parent company (of which you already have a copy).

3. Members therefore do not need to worry about the recent volatility in equity markets, for example. Their benefits are to be secured / paid in full.

4. In the event, the service provided by L&G has been lamentable. For a long while they did nothing. When they did eventually apply resource to the scheme, the work was very often late and / or wrong.

5. Aegon have set 3 "rebalancing" slots for the scheme so far this year (this is the process by which Aegon will accurately calculate the final premium required to secure members' benefits). L&G failed to apply the necessary resource to come anywhere close to meeting the deadlines or requirements to enable us to proceed on the first two occasions.

6. We have escalated the scheme within L&G and received commitments about service going forward in particular working towards the third "slot". We have continued to receive poor service. In particular, Aegon have said the data L&G have been supplying is unfit for purpose. The data has improved but even at this very late stage, Aegon have raised significant concerns over the data and their ability to price the contract (hence our request for details about certain members' spouses of Monday - many thanks for your assistance in this regard).

7. The decision to retain L&G as scheme administrators was right at the time. In the event, they have done a poor job. I could appoint alternative administrators to do this work but that, in itself, would take time and cost and then the new administrators would have to start from scratch. My decision has been to retain L&G and endure the frustrations that decision has brought with it.

8. I have been faced with a decision about whether to finalise the buy-out with Aegon by reference to data which is unclear, incomplete in certain respects and inconsistent or to allow more time for the data to be perfected. My primary duty as trustee is to ensure that the members get the right benefits at the right time. Uncertain and incomplete data means that the benefits may not be right or that the price will be unnecessarily and avoidably high.

9. Having considered the position at length and consulted with the parent company's advisers, my decision therefore is that L&G should have more time to get the data (and hence members' benefits) right. This means that there will be a further delay in issuing members with a policy in their own name but, as I have said many times before, this does not mean that members lose financially.

We have yet to hear from Aegon as to the next available "slot" but, now that it appears that L&G have broken the back of the data work, I am hopeful that we will be able to conclude the process definitively at the 4th attempt. I will be arranging a further meeting with L&G to secure all necessary resource and to discuss the position generally.

I hope that this frank explanation of the issues we are facing is of assistance, even if it does not bring matters to the swift conclusion that you (and other members) hope for.

Yours sincerely.

Philip W. Sutton

From all of this I gather we are still no nearer a settlement, L&G are still a crap company to deal with and Hammonds LLP still appear to carry no weight in the negotiations. All in all, we seem to have been sold a pup of a pension scheme. I will continue to press for action, but don't hold your breath for a resolution any time soon.

Diana Ross had nothing on us! (Still Waiting!)

Tuesday 27 Sept 2011 (19:52) Response from Hammonds.

Dear Mr Nichols

My email to you is undergoing peer review and should be issued tomorrow.

Regards.

Philip W. SuttonDirector
For and on behalf of
The Trustee Corporation Limited

Needless to say, no response 28 Sept 2011 (Who'd have thought it?)

Information and Message to Hammonds 5th Sept 2011

http://www.pensionsadvisoryservice.org.uk/workplace-pension-schemes/final-salary-schemes/winding-up

There is information here regarding what is required in winding up a company pensions scheme.

Email message dated 05 September 2011

Mr Sutton,

I see from the tone of your last response that finally you are beginning to tire of my incessant pestering of you and your involvement in the TGFS Pension scheme, this is at least a relief - I was beginning to wonder if I was ever going to get through to you.

I will respond to your points in due course, firstly I would like to bring to your attention something I have copied from The Pensions Advisory Service (TPAS) website regarding a winding up of a pension scheme: -

The trustees also need to issue a progress report to members at least every 12 months thereafter.

These subsequent reports must give details of:

• Action being taken to establish the scheme's assets and liabilities;
• Action being taken to recover any assets not immediately available;
• The estimated date when final details of members' benefits are likely to be known; and
• The extent (if any) to which the value of the member's benefits is likely to be reduced (if relevant and the trustees have sufficient information to state this).

This clearly isn’t happening and hasn’t happened, the website goes on to state the following: -

For schemes winding-up after 1 April 2003, once the scheme has been winding up for three years, the trustees will have three months to submit their first report. Subsequent reports are to be made at least once every 12 months.

On request, trustees must provide members or beneficiaries with a copy of any report, which has been made to TPR (The Pensions Regulator) in connection with the wind-up. The copy must be provided within two months of the request.

As the winding up process was commenced in the summer of 2008, according to my calculations this has exceeded the first three year point so you as trustees ought to have submitted your first report to The Pensions Regulator, if so, I formally request a copy of this report forthwith, and if not I would like an explanation as to why this hasn’t occurred.

Regarding your points,

1, Whilst we agree that the scheme has the backing of a Tokyo listed company, according to information obtained, members should have had the option of transferring the funds of the scheme to a new pension provider, at the original meeting between yourselves and the members at the company premises we were advised to refrain from making any requests that would delay the process, this can be taken that had this option been available sooner, member would have been able to make further contributions which at present they haven’t, thus this can be taken as a financial loss.

2, We agree the scheme is winding up, however, the point made above is still valid.

3, We can understand the point that you share our frustration, however, you don’t appear to share the information!

4, We again take your point on this, the worry is that we only have your word that you are doing everything possible to expedite this, and our concern is that there doesn’t appear to be any concern over the time involved (notwithstanding the lack of information). And, no, we don’t want to spend money unnecessarily on anything, it is just that we feel that we aren’t getting a fair result presently, no information is forthcoming, deadlines appear to be reached, passed and nothing reported (like the data transfer recently – what happened?), basically, we are fed up of being fobbed off with false promises, lack of apparent actions and then expected to just sit and wait, this is our livelihood when all is said and done!

What happened to the plan of outstanding actions which was supposed to be imminent?

Rather than argue the points, and as any action might prolong the misery we are already subjected to, I’m not expecting you to respond to these points other than providing the information requested and overdue. Any failure to do so may be seen to be that there is something to hide.

Response from Hammonds 30th Aug 2011

Thank you for your further email. My comments are set out below:

1 The scheme (and hence, in effect, the members) have the benefit of a guarantee from a Tokyo listed company. I assume that you have passed this to the solicitor you have consulted. This means that members should suffer no financial loss. Does your solicitor disagree?

2 I note that you have also consulted a "pensions administrator" who has indicated that the members' inability to invest or add to funds is a potential loss. They are missing the point. The scheme is winding-up. It can accept no further contributions. In addition, the scheme has the benefit of a guarantee and members' benefits are being bought out in full. The only way members could invest or add to these funds would be to transfer them to some form of defined contribution pension contract and so expose the funds to (a) investment risk until they retire and (b) the risk that annuity rates harden (as they have consistently done over many years) so weakening the purchasing power of their fund. It would be a somewhat unusual action to take in the circumstances.

3 Assuming members suffer no loss, the members' complaint relates to the time it is taking to conclude the winding-up of the scheme and issue individual policies to them. As I have stated many times, we share this frustration. Whilst the delay is frustrating, I reiterate - there is no loss. Do members understand this?

4 Members are, of course, free to initiate whatever action they consider appropriate. However, as the concern is about timing, member action will simply add to the time it takes to conclude the winding-up of the scheme. You are already familiar with how long a Pension Ombudsman investigation can take. Multiple actions would probably further increase timescales , as in all likelihood the buyout could not complete whilst investigations by regulatory authorities are ongoing. In short, member action is likely to further lengthen the process rather than speed it up and as such would seem to be self defeating. Do members really want to spend money on this?

I am awaiting confirmation on the status of the data and will update you when I know more.