For the first time, a regulatory intervention report (RIR), published today, details the full investigation by TPR into The Meghraj Group Pension Scheme (MGPS).
Mel Charles, Interim Executive Director of Regulatory Compliance at TPR, said: “Our action against two targets will reduce the pension scheme’s deficit and our report shows how we will pursue those who extract funds to the detriment of scheme members.
“It demonstrates, once again, our determination to investigate complex commercial arrangements and use our powers to ensure we protect members and the Pension Protection Fund.”
The case
TPR took action against two people in relation to a large cash payment from a subsidiary of MGPS’ employer, Meghraj Financial Services Limited (MFSL), to an entity outside the employer group – the Meghraj Group, an international investment, banking advisory and fiduciary services organisation.
In 2014, a subsidiary of MFSL, Meghraj Properties Limited (MPL), directed a payment of £3,688,108, funded by the sale of shares in an overseas joint venture, be made to a nominee company associated with a director of MPL.
TPR said the money should have been used to fund the defined benefit pension scheme and the extraction of the funds from the employer group was materially detrimental.
Following the payment, the employer and its subsidiary went into liquidation, leaving the scheme with a substantial deficit. The scheme entered a Pension Protection Fund (PPF) assessment period in October 2014.
TPR used its anti-avoidance contribution notice powers to require Anant Shah, the sole director of MFSL, and his nephew Rohin Shah, a director of MPL, to pay more than £3 million to the scheme. Targets of CNs are required to pay a specified amount to a scheme or, in some circumstances, to the PPF.
Landmark judgment
Rohin Shah and Anant Shah referred the decision to the Upper Tribunal (UT). Before that hearing, TPR settled its case against Rohin Shah.
In a significant legal decision last July, the UT agreed with TPR that it was reasonable Anant Shah pay a CN, which included 50% of the sum that should not have been diverted from the scheme’s employer plus an uplift to take account of the passage of time.
The judgment also accepted TPR’s case more generally that the amount of a CN should be what is reasonable and is not limited to the loss to a scheme resulting from the acts or failures to act.
A CN for more than £1.8 million was issued to Anant Shah on 18 August 2023.
The PPF and scheme trustees are pursuing Anant Shah for payment.
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