Pension savers pushed to ‘edge of despair’ over company collapse

Retirement savers ensnared in the protracted wind-up of the failed Hartley Pensions group say they are being driven to the “edge of despair” as uncertainty lingers over the future of their nest eggs.

Jonathan Booth, 64, from Hertfordshire, is one of around 17,000 customers of the Bristol-based Hartley Pensions who have been unable for 18 months to transfer their funds — totalling about £1.3bn — to other providers after the self-invested personal pension (Sipp) company was placed into administration. 

Fruitless attempts to find a buyer for the stricken business, and ongoing efforts by the administrator to reconcile the various pension books acquired by Hartley over the years, have led to delays.

Booth wrote to FT Money after appeals to his local MP and other policymakers to intervene over his pension woes prompted a “disappointing” response. 

The situation raises concerns for tens of thousands of Sipp holders across the market, which has boomed since 2015 reforms gave over-55s full freedom over how they spend their retirement cash. It has also led to calls for reform of the rules on administrators’ fees.

“It is shocking that pension savers have been left in limbo for so long, facing huge stress and in fear of losing a significant chunk of their retirement savings,” said Jenny Ross, editor of Which? Money, the personal finance magazine.

Booth’s involvement with Hartley began in 2021 when his financial adviser, whom he chose not to name, recommended he pool his various pension pots into a Hartley Sipp.

“I put my trust in my financial adviser,” Booth said. “They didn’t register any issues with Hartley at the time.”

However, a year later things took a worrying turn for Hartley Sipp customers.

“I received an email from Hartley in early July 2022 saying they had restrictions put on them by the Financial Conduct Authority but it wasn’t anything to worry about,” said Booth, who is a manager at a not-for-profit organisation.

Several weeks later he received notice that Hartley had been placed in administration. “I immediately called my financial adviser and his advice was not to worry, that my funds were safe,” he said.

In the months before administration, Hartley had been subject to a number of interventions by the FCA due to “serious operational, financial and regulatory issues”.

The FCA requested that the firm move into administration “in the interest of clients”, it said.

UHY Hacker Young, an accountancy firm, was appointed as administrator by Hartley in July and initially tried and failed to find a buyer for the ailing company to avoid a full liquidation.

The strains of the administration on Booth and other Hartley customers was exacerbated by the administrator imposing a transfer ban.

There was a further setback for trapped customers when the administrator sought court approval to replace annual management fees with an “exit and administration charge (EAC)” designed to cover its costs, which it initially estimated at around £40mn, or 2-3 per cent of total assets.

For Booth, this meant a £4,000 knock to his pension. “This was a further blow,” he said. “It came out of the blue”.

Booth subsequently wrote to his MP, Bim Afolami, asking for help. 

His Hartley Sipp, worth several hundred thousand pounds, is his sole retirement fund, and is meant to provide for himself and his wife. His retirement plans are now in disarray due to the uncertainty over his financial position.

Replying to Booth, Afolami, who is also economic secretary to the Treasury, said it was “frustrating” that he might have to pay administrator’s charges but that the alternative of liquidation could be worse, bringing significant disruption and risking tax charges.

After pressure from Sipp holders’ lawyers, the Financial Services Compensation Scheme, the safety net for customers of failed firms, confirmed it would step in to cover the administrator’s charges, now estimated at around £31mn.

However, lawyers said this did not fully resolve matters for embattled Hartley customers.

“The statement made by the FSCS does not provide all the detail at this stage,” said Gareth Fatchett, solicitor at FS Legal, which is acting for Hartley customers. Many people faced wider losses after being in limbo for 18 months, he added.

Former pensions minister Baroness Ros Altmann said Sipp investors needed better protections. “The costs of administration of failed pension firms, which are uncontrolled, need to be handled differently, as it could become a licence to charge money without adequate scrutiny,” she said.

While the immediate need was to resolve the issues facing customers, said Ross of Which? Money, “there will rightly be a time for asking serious questions about the actions of the regulator and administrators in this case”.

UHY Hacker Young says it now expects transfers to start in April and be completed a year later. However, Booth wants the government to act immediately to unfreeze his pension. “This should happen tomorrow,” he said. “As one of the victims of this scandal I can tell you that I have been driven to the edge of despair by the uncertainty.” 

UHY Hacker Young told the FT it “fully appreciates” the stress that the administration may have caused customers and said the administrators were doing all they could to “facilitate the transfer-out process as quickly as possible”.

Customers had maintained access to their Sipps and were able to draw down funds, it added. “While this process has been ongoing, it would have been unfair to allow certain clients to transfer out ahead of others before an EAC was agreed.”

A Treasury spokesperson said: “The FSCS announced last week that they will provide compensation for customers of Hartley Pensions to fund the movement of customers away from Hartley to other Sipp providers.”

The FCA said in a statement the FSCS action would “reduce the impact” on Sipp customers. “We will continue to engage with all parties to ensure the best outcomes for them, as quickly as possible.”