A former pension scheme trustee has been given a 10-month jail term, suspended for 12 months, after admitting using scheme funds to make five prohibited loans to entities connected to the scheme’s sponsoring employer.
Stephen Smith, 64, of Broughton-in-Furness, Cumbria, a former trustee of the Worthington Employee Pension Top-Up Scheme (WEPTUS) and director of the employer, received the sentence at Burnley Crown Court today (Thursday 4 January 2024) following a prosecution by The Pensions Regulator (TPR).
His Honour Judge Unsworth KC told Smith he would also have to complete 150 hours of unpaid work in the community and pay £1,000 in prosecution costs.
HHJ Unsworth said: “Any mismanagement of pension schemes has the potential to cause real harm to people, many of whom will have sought to rely on those investments to keep them in later life. Mismanagement of schemes undermines public trust in the pension system in general”.
Smith had pleaded guilty to making five prohibited loans totalling around £700,000 at an earlier court appearance.
The court heard Smith had played a central role in running the scheme but had failed to act in the best interests of its beneficiaries or with impartiality and was negligent in the performance of his trustee duties.
Ultimately all scheme monies were lost as the loans were converted into another employer- related investment which failed, although Smith was not a trustee at the time of the failed investment.
Nicola Parish, TPR’s Executive Director of Frontline Regulation, said: “Rules restricting trustees from lending scheme money to a sponsoring employer are there to safeguard workers’ pension pots.
“Smith chose to flout these rules and, as this prosecution shows, we will take tough action to punish those who risk the pension funds they are entrusted to look after.”