TPO’s Pensions Dishonesty Unit pilot comes to an end

As funding for the pilot Pensions Dishonesty Unit (PDU) comes to an end, The Pensions Ombudsman (TPO) looks back at the pilot’s achievements and reflects on the learnings as the work of the pilot is wound down. 

The PDU pilot was set up in November 2021 to investigate allegations of serious breaches of trust, misappropriation of pension funds and dishonest or fraudulent behaviour. To date, it has issued Determinations in relation to 12 pension schemes involving more than 800 members and directed redress of over £40million. 

It was a significant development for the industry, providing new ways to hold wrongdoers to account through final, binding and enforceable Pensions Ombudsman Determinations. It also enabled quicker redress and the recovery of funds that may otherwise not be achieved, either directly from the party at fault or through compensation schemes.

As a direct result of the work of the PDU, The Pensions Regulator (TPR) has appointed Independent Trustees and those trustees have in turn made successful claims on the Pension Protection Fund’s Fraud Compensation Fund (FCF) for the benefit of scheme members. 

PDU investigations are extremely complex and resource intensive and, although they have been providing justice, it has proven difficult in practice to ensure that scheme members are compensated for losses by the wrongdoers directly. Parties at fault have been able to delay or avoid liability by filing for bankruptcy, or by appealing our Determinations which forces the other parties, notably the affected members, into court proceedings with the ensuing litigation risk and cost. This means that the actual recoveries to date are substantially more modest than the £40 million directed. In addition, claims can be made to the FCF which, if there is a finding that assets have been lost due to dishonesty, can compensate the scheme for the benefit of the affected member(s).

Due to broader government funding constraints, DWP funding for the PDU pilot ended on the 31 March 2025, with runoff funds available until October 2025 to complete specific investigations. The threat posed by pensions scams has not gone away and TPO will ensure that affected customers receive signposting to appropriate reporting avenues, such as TPR and Action Fraud, which can limit the impact of wrongdoers and, where possible, hold them to account. We will also point members to potential sources of alternative redress.  

The Ombudsman may, in the future, still decide that a specific case within an occupational scheme may be investigated where there is no prosect of alternative redress, where there is a reasonable likelihood of redress and/or there is a novel legal issue or different type of scam involved. 

TPO will continue to liaise closely with TPR, Independent Trustees and the FCF to ensure that the pensions industry is effectively working together to support members that are victims of pensions dishonesty.

Dominic Harris, Pensions Ombudsman, said:

“I have seen the impact of pensions dishonesty on members who bought us their complaints and I am extremely proud of everything the PDU achieved. It made use of our unique and wide powers to hold individuals accountable for the actions of trustees where there have been acts of dishonesty, and it made a real difference to victims by providing them with a voice and shining a light on pension scams. It also strengthened TPO’s key partnerships and enhanced intelligence sharing with the likes of The Pensions Regulator (TPR), the Fraud Compensation Fund (FCF) and enforcement bodies such as Action Fraud.”