Home Business News Almost £2 million to be paid to pension scheme after tribunal backs TPR decision

Almost £2 million to be paid to pension scheme after tribunal backs TPR decision

by LLB Finance Reporter
31st Jul 23 1:51 pm

A tribunal has upheld a decision by The Pensions Regulator (TPR) to issue a contribution notice (CN) for almost £2 million to be paid into a pension scheme.

Anant Shah, the former owner of the scheme’s employer, will be required to pay £1,875,403 into the Meghraj Group Pension Scheme.

This is the first substantive case the Upper Tribunal (UT) has heard regarding TPR’s CN power and provided helpful clarification, particularly that the amount of a CN is not limited to any loss suffered by the scheme.

Erica Carroll, TPR’s Director of Enforcement, said: “We welcome this clear and helpful judgment, which supports our long-held views about how the legislation should be interpreted.

“It provides clarity on how CN sums should be calculated by confirming they are not limited by the loss to the scheme. This ends the speculation caused by past cases over whether these sums should be purely compensatory.

“The amount of this CN together with the previous settlement, will provide a substantial sum to help meet the scheme’s deficit.

“We will always consider taking action where we see savers’ money has been put at risk.”

The case concerned the Meghraj Group of companies, a 100-year-old international investment and banking advisory and fiduciary services organisation with offices in Asia, Africa and Europe.

Within that group, Meghraj Financial Services Limited (MFSL), was the sponsoring employer of the scheme, and entered a creditors’ voluntary liquidation in October 2014 leaving the scheme with a deficit of around £5.85 million.

TPR investigated a series of payments made from MFSL to its parent company, Meghraj Property Limited.

Those payments followed MFSL’s disposal of its shares in a joint venture company with most of the sums paid out as dividends.

TPR said these payments should have been used to fund the scheme and the failure to do so was materially detrimental to the scheme’s members.

At an earlier hearing, before the Determinations Panel (DP) in February 2020, TPR argued it was reasonable to issue a CN against two targets – Anant Shah, a director of MFSL and his nephew Rohin Shah.

The DP agreed and in June 2020 issued a Determination Notice confirming a CN of £3,688,108 be issued against the targets jointly and severally.

Each of the targets referred the decision to the UT with a hearing taking place in May 2023.

Before the hearing, TPR settled its case against Rohin Shah.

The UT judgement agreed with TPR’s that it was reasonable Anant Shah pay a CN, which included 50% of the sum that should have been paid into the scheme plus an uplift to take account of the passage of time since the acts in question.

The judgement also accepted TPR’s case more generally that the amount of a CN should be what is reasonable and that the amount of a CN is not limited to the loss to a scheme resulting from the acts, or inactions.

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