The insidious tactics used by a gang of pension swindlers can be revealed following the jailing of two key conspirators.
Alan Barratt, 62, was sentenced to five years and seven months last Friday, and Susan Dalton, 66, got four years eight months after both admitted fraud charges.
The gang traded under names including Friendly Pensions, persuading victims to transfer savings from their occupational pensions, resulting in 245 people losing £13.7million.
Even before victims picked up the phone, the scammers had pulled off their first trick, using software to make it look like they were calling from within the UK.
The 20-strong gang was really working out of an office in Javea near Benidorm in Spain, following up leads generated by cold calls, texts and online adverts.
Sales scripts seized by The Pensions Regulator, which brought the prosecution, reveal more ploys used to snare victims.
The most blatant lie was the claim that everyone transferring their pension would get minimum annual returns of 5%.
This was described by the prosecution at Southwark crown court, in South London, as “entirely without foundation”.
According to the crooks’ script, the pensions would be invested in “solid assets including bonds, shares, commercial property”.
In reality, victims’ money was used to pay commission to sales reps, was pocketed by Barratt and Dalton, and used to fund the businesses and ski-holiday lifestyle of ringleader David Austin. A small portion of the money, around £2million, was put into an off-plan hotel development in St Lucia in the Caribbean but all of it was lost.
The script included a line in which victims were told that they would get a cashback deal, but any lump sums paid to victims were simply taken from their own investments and returned to them.
One paragraph in the script stated that the arrangement was confidential, saying it was “really critical” that it was not divulged to any third party. This was vital to the gang because the offering of inducements to get someone to transfer a pension is illegal.
The gang disguised the payments as what it called “commission rebates” for customers. The court heard that Dalton was said to have told one victim who was transferring a pension away from a legitimate Hargreaves Lansdown scheme: “Please remember not to mention the commission rebate as this is strictly private and confidential. Under no circumstances must you mention to Hargreaves Lansdown that any incentive is being paid. Do not mention any remuneration at all please.”
The prosecution said the insistence on secrecy was “a clear indication of fraudulent activity”.
Victims were told: “We will refer you to an independent financial adviser”.
This promise was later quietly forgotten – the last thing the scammers wanted was anyone getting independent advice about their pension.
According to the script: “All the schemes we look at are fully regulated and HMRC compliant.”
In fact, victims aged under 55 were not warned about significant tax implications of transferring their pensions.
The sales reps stated: “These investments are subject to availability.”
This, and other ploys, such as sending paperwork by courier, were designed to pressure victims into making rushed decisions.
Other tactics included sending threatening legal letters to any legitimate company schemes that were reluctant to transfer pensions, and dropping clients who asked awkward questions.
One internal email found by The Pensions Regulator read: “I would leave this client alone, he seems far too intelligent for us to be dealing with him.”
The gang set up a network of companies offering fraudulent occupational schemes, apparently all with independent trustees – who were either Barratt or Dalton.
Barratt, from Althorne, Essex, was paid commission of £400,000 and Dalton, from Rochdale, Lancs, got £168,000.
In sentencing, Judge Gregory Perrins told them: “You should both be ashamed of your role in bringing about so much misery to so many people”.
Among the victims was critical care nurse Pauline Padden, above, from Merseyside.
Now 58, she was looking after her terminally ill mum when she received a text message offering her a better deal on her pension and some cash in return for transferring her pot.
Convinced by the sales pitch, Pauline moved her workplace pension scheme into one called the Gresham Investment Pension Scheme.
She lost £45,000.
“I did this to try and make my retirement easier, but I’ve been left high and dry,” she said.
“My children are worried and angry as they know I have worked so hard.
“They ask me why I’m not giving up work. I tell them that I can’t - I cannot afford to live.
“While friends and family talk about retiring I will probably have to keep working until I’m no longer fit to do so.
“If there are other scammers out there, I hope they see the news of this sentencing and get the message that they will face the full force of the law for their crimes.”
Another of the scammers’ companies, Regency Pensions, took £114,000 from former miner Stephen O’Reilly, above.
He’d responded to an offer of a free pension review.
The 61-year-old who now works as a bookmaker on the Isle of White said: “These scammers have ruined my life.
“Now I’m depressed all the time because I know I’m going to have to work for the rest of my life because my pension has been stolen.
“I was going to move to Spain. I’d hoped to buy a little property and do it up – but these scammers have put an end to that.
“I have four children, whatever I had left would have gone to them but now they are getting nothing.”
After sentencing Nicola Parish, Executive Director of Frontline Regulation at The Pensions Regulator, said: “This is a despicable case which highlights the devastating impact pension scammers have on their victims.
"Savers should always be careful when making any decision to transfer a pension pot that’s taken a lifetime to build and should contact MoneyHelper, part of the Money and Pensions Service, for impartial guidance first.”
None of the stolen pension money has been recovered.
David Austin killed himself in 2019 after being invited to be interviewed under caution.
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