Jeff Prestridge  

Steel-ing staff pensions

Jeff Prestridge

Jeff Prestridge

He heralds from Port Talbot and recently drove down to the town to find out more about what has happening to the “boys I went to school with”.

He was shocked – and it takes a lot for Mr Rush, an ex-military man who did service in Bosnia, to be ruffled.

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Mr Rush told me he counselled – not advised – nearly 40 steelworkers about what they should be doing with their pension. A transfer to a Sipp, he said, was right for no more than five, even though nearly all of them had been urged to do so by other advisers. He described what was going on as a “feeding frenzy” and “truly awful”. 

“These men are steelworkers,” he said. “They are lambs to the slaughter. What I uncovered has been staggering; truly awful. I have shouted at the Financial Conduct Authority for the past two weeks and the response has been indifferent.”

There are good advisers out there, like Mr Rush, who are acting in the best interests of steelworkers. Some others also seems to be going about their work diligently, offering sound guidance.

And we must not forget that the Tata situation is atypical when it comes to pension transfers (because of the threat of lower pension benefits).

Yet the fact remains that pension transfers should be the exception not the norm. This is a point that Darren Cooke of Red Circle Financial Planning drilled home to me in recent days.

Like Mr Rush, Mr Cooke is an IFA I hugely respect. It was he who led the charge for banning pension cold-calling, something that has, scandalously, yet to be put into place.

His view is that transferring a defined benefit pension should be the exception not the rule; suitable only for those who have secure retirement income from other sources or who maybe have a short life expectancy.

“The regulator states that it will be in the interests of most people to retain their current defined benefit pension scheme rather than transfer,” he said. “It does not say that to be mean, but because it is generally the right advice.”

We must nip this scandal in the bud.

Jeff Prestridge is personal finance editor of the Mail on Sunday