A former pension scheme trustee has been handed a 10-month prison sentence, suspended for a year.
Stephen Smith, 64, of Broughton-in-Furness in Cumbria, admitted to using the scheme’s funds to make five prohibited loans, totalling around £700,000 to entities connected to the scheme’s sponsoring employer.
Smith was sentenced at Burnley Crown Court on Thursday (January 4), following a prosecution brought by the The Pensions Regulator.
He was also told to pay £1,000 in costs and complete 150 hours of unpaid work.
Judge 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”.
The court heard how Smith had played a central position in running the scheme but had failed to act in the best interests of its beneficiaries or with impartiality, according to the TPR.
The result was that all scheme cash was lost as the loans were converted into another employer-related investment which failed, though 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.”
tara.o'connor@ft.com
