THE case of an East Lancashire victim of a pensions “scam” which could cost him at least £32,000 has been highlighted at Westminster.

Blackburn MP Jack Straw has asked a Treasury minister to look into what can be done to reduce the loss caused to the building supplies salesman in his late 40s.

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He gave details of his embarrassed constituent to Financial Secretary David Gauke but called him “Mr Smith” during a special half-hour debate in the House of Commons.

He told the Minister Mr Smith had taken out a private pension aged 18, but on losing his job decided to use a pension liberation scheme called Ark to release £58,000 of his total retirement pot of £122,000 early to start a business.

Then trustees Minerva and Athena assured him it was tax free.

After the government replaced them because of “concerns”, the High Court ruled in 2011 the complex scheme was not tax free.

Mr Straw said Mr Smith now faced a bill from Her Majesty’s Revenue and Customs of at least £32,300 with questions over where the other £64,000 of his savings had gone.

HMRC have yet to decide his tax liability and are negotiating with the new independent trustee, Dalriada, about the position of Ark clients.

Mr Straw told Mr Gauke: “Over the past few years, I have come to know Mr Smith very well.

“He is a thoroughly decent, honourable man.

“He had been led to believe that this method of releasing funds early from his pension account was entirely lawful.

“Mr Smith now finds himself in limbo.

“He has been the innocent victim of a very elaborate and sophisticated arrangement.

“I have no sympathy for the architects of the scam. I have every sympathy for Mr Smith and his wife.”

Mr Gauke said: “I fear I cannot provide certainty for your constituent.

“This is complex case.

“The Ark case highlights the need for people to be on their guard.

“If it sounds like it’s too good to be true, then it probably is.”

Mr Straw said after the debate: “We made some progress but there is still much to be done.”

Sean Browes from Dalriada said: “I have every sympathy with Mr Smith.

“This is a challenging case and since the Pensions Regulator replaced the original trustee, we have done much to recover money invested in risky schemes, often overseas.

“We are in talks with HMRC.”