Trustee admits illegally investing pension funds

The former owner of Norton motorcycles has pleaded guilty to the charge of illegally investing pension plan money in his bankrupt business.

The pensions regulator announced in August 2021 that it would prosecute Stuart Garner, accused of transferring some £14million in assets from three pension schemes – Donnington 2012, Commando 2012 and Donnington MC, which have 227 members between them – in his company Norton.

The business then failed, leaving members unsure if they would ever see the money owed to them.

Garner appeared in Derby Magistrates’ Court on February 7 charged with illegally investing money from the three schemes of which he was the sole trustee in a company he owned.

He pleaded guilty to three counts of violating employer-related investment rules by investing more than 5% of each scheme’s assets in his business.

Nicola Parish, executive director of frontline regulation at TPR, said: “As a trustee, Stuart Garner failed to comply with investment restrictions that are intended to protect pension plan funds.

“Trustees have a critical role in protecting members’ benefits and we will take action if this responsibility is abused. Trustees need to be clear when a pension plan can invest in its sponsoring employer.”

A seven-year ordeal

The plans were established by Garner in his capacity as director of Manorcrest, their principal employer. They were then sold to potential members as a means of investing in Norton Motorcycles’ flagship business.

The schemes were administered by two directors of the T12 administration who were later jailed for pension fraud in a separate case. Garner then appointed LD Administration in their place, only for its director, Margaret Liddell, to admit to the mediator that she and her staff had no training or experience in the administration of occupational pensions.

In the meantime, 228 members of the three plans invested their entire pensions in Norton Motorcycles, which the ombudsman said was a “clear conflict of interest” given Garner’s relationship with the company. .

The pensions regulator appointed Dalriada Trustees to oversee the schemes in 2019, who felt that due to Norton’s precarious financial situation, supporting the company in its bid to raise funds represented the best chance for members to recover their money.

Attempting to extract funds from the company or from Garner personally was unlikely to succeed.

Norton then fell into administration in January 2020, leaving members unsure if they would ever recoup the £14million owed to them.

The case has raised questions about the effectiveness of the pensions regulator, prompting it to conduct an internal review of its approach and response.

In January, the case was cited by the ombudsman, who also pointed to recent cases with the Grosvenor Pension Scheme and the Henry Davidson Limited Pension Scheme, as prompting the creation of a new team of specialists to investigate breaches of trust and allegations of dishonesty. and the fraudulent behavior of plan administrators.