Thousands of pension investors fear they have lost millions of pounds in a troubled forestry investment promising rich returns in Costa Rica.
Almost 3,500 investors have put money into Ethical Forestry Ltd, a financial firm based in Bournemouth, Dorset.
Most of the investments were through SIPP or Qualifying Recognised Overseas Pension Scheme (QROPS) pensions.
Directors of the firm took more than £20 million in remuneration from the company between 2011 and January 2016, when liquidators were appointed.
Last year, before going into administration, the company claimed trading was challenging mainly due to a “volatile and unpredictable UK regulatory environment”.
No guarantee of rescue
Investors concerned about losing their money have received an update from the administrator.
The letter explained that Ethical Forestry in the UK and several other British companies that are also in liquidation owned 80% of the shares in Ethical Forestry SA. This is a Costa Rica company that runs the investment.
The plantation owner, American Robert Brown, has made an offer to buy out the investors.
However, he warned that the price he would offer depends on an independent audit of the plantation to make sure the timber Ethical Forestry in the UK claims to have planted exists.
“Nothing is guaranteed and the process in Costa Rica depends on this audit and obstacles in restructuring the investment,” he said.
Scammers can’t be stopped, says minister
Meanwhile, the concern follows a warning from pensions minister Ros Altmann that the government can do nothing to stop investment scams dressed up as free pension reviews.
She explained that scammers have changed tack and are targeting cash released from savings under flexible freedoms.
“Instead of trying to persuade pension savers not to buy an annuity and to hand over their cash, they are now urging them to take money out of their pots to invest in dubious investments promising unlikely high yields,” said Altmann.
Government figures suggest savers have lost millions to fraudsters since the freedoms were introduced in April 2015.
The estimate of pension cash lost to scammers jumped from £1.4 million in April 2015 to £4.5 million in May 2015 alone.
“Pension companies pay out a pension pot to anyone aged 55 or over who asks for their money,” said Michelle Cracknell, chief executive of UK regulator The Pensions Advisory Service
“If they want to invest in a car park or hotel in Cape Verde, they can, but investors should remember. these investment companies are unregulated, the money goes overseas where it is hard to track and they have no consumer protection.”