Pension unlocking - High Court freezes pension reciprocation scheme assets

A High Court judge has issued a freezing order affecting over a million pounds of assets. Papers released by
the High Court revealed that three related firms  - Ark Business Consulting, Ark Commercial Pension
Planning and Ark Commercial Retirement Planning  - had been prevented by Mr Justice Henderson from
moving around £1.08m from the country to Cyprus. The monies frozen relate to fees billed by the firms
when a pension scheme member tries to "unlock" their monies while under age 55. The schemes claim to
be able to circumvent minimum pension age rules by writing loans (of up to 50% of the pension scheme
funds) to members instead of paying pension benefits.

The law firm McGrigors is acting on behalf of Dalriada Trustees and their pensions partner Ian Gordon said:

"Many of these so-called unlocking schemes test the boundaries of what is legal and effective, and everyone should be made fully aware of the risks. The types of organisations who typically market schemes
of this nature are often registered abroad and as such are not regulated by the FSA. We would advise
anyone who is approached with an 'unlocking' or reciprocation proposition to proceed with the utmost
caution. Some press reports have indicated that pensions reciprocation agreements are marketed as a
means to free up investment for capital in overseas real estate ventures, and that type of arrangement
should sound alarm bells."

The Pensions Regulator and the FSA also issued warnings about such schemes last month

New deposit compensation limit for the UK

The FSA has confirmed that the new deposit compensation limit for the UK increased from £50,000 to
£85,000 per person, per authorised firm, effective from 31 December 2010. This is the Sterling equivalent of the €100,000 deposit compensation limit which came into force in all  European Economic Area (EEA) member states at the end of 2010.

Further changes coming into effect on 31 December 2010 are:

• Fast payout rules, with a target of a seven day payout for the majority of claimants and the remainder
within the required 20 days
• Gross payout, which protects customers by ring fencing their deposits if they have savings and loans
with the same firm. Currently, any outstanding loan or debt would be deducted from any
compensation.

This new pan European requirement replaces the existing UK arrangement which has been in place since
2009, and which allowed for separate compensation cover for customers with deposits in two merging
building societies