The Ministry of Defence (MoD) has been directed by the Pensions Ombudsman to reinstate a former member of the Armed Forces Pension Scheme and pay him £2,000 for the severe distress and inconvenience caused, after wrongly allowing him to transfer to a pension scam known as the Capita Oak Pension Scheme.
Mr S was an active member of the Armed Forces Pension Scheme (AFPS) from 1988 to 2011, after which he became a deferred member. It appears that at some point in 2012 Mr S was approached by a representative of Capita Oak and persuaded to transfer his pension into the scheme, which turned out to be a scam arrangement.
The AFPS received Mr S’s transfer request in January 2013 and the MoD provided a transfer value that same month. During that time, the MoD correctly checked that the Capita Oak Pension Scheme was registered with HM Revenue and Customs as part of its due diligence checks. However, the transfer was then delayed for several months as Mr S had not provided the MoD with sufficient proof of identification.
In the meantime, the Pensions Regulator published updated guidance on scams and transfers in February 2013. This guidance warned pension operators to look out for certain ‘red flags’ in pension transfer requests that might indicate the existence of pension liberation scams.
The Pensions Ombudsman found that the MoD failed to implement this guidance prior to proceeding with Mr S’s transfer request in September 2013. It was not until November 2013 that the MoD changed its procedures to address the updated guidance.
In August 2013, Mr S provided the MoD with proof that he was receiving jobseeker’s allowance. This fact proved central to the Pensions Ombudsman’s determination as explained below.
The Capita Oak Pension Scheme subsequently failed and Mr S appealed to the Pensions Ombudsman, alleging that the MoD had failed to carry out due diligence checks that would have prevented the transfer.