PensionsOct 25 2017

Regulator probes missing data in British Steel pension deal

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Regulator probes missing data in British Steel pension deal

The Pensions Regulator (TPR) has stepped in to investigate the deal being offered to British steelworkers after alerts that thousands of members are being forced to make a decision about their financial future without vital information, FTAdviser understands.

In August, Tata Steel UK (TSUK) got the go-ahead to offload the British Steel Pension Scheme and create a new defined benefit fund.

Some 130,000 members have to choose by 11 December if they want to be transferred to a new scheme being created, BSPS II, or remain in the old defined benefit plan which will be moved to the lifeboat scheme, the Pension Protection Fund (PPF).

However which route will be best will depend on a variety of individual factors.

To make this irreversable decision, pension scheme members have been sent document packs by the pension scheme's trustees which supposedly give them all the information they need about their individual circumstances to make an informed decision.

However, in around 4,300 of these individuals’ packs, there is a lack of data, such as not having an employment starting date, incorrect estimates of the pension value, or even no individual figures at all.

According to a document from the scheme trustees seen by FTAdviser, this affects 4,292 individuals, mainly deferred members.

Stefan Zaitschenko, a former Tata steelworker who helps run a Facebook group for members of the old scheme with 4,300 participants, was told by the regulator that the organisation is receiving a large number of calls from British Steel members.

Mr Zaitschenko said: “They said there is enough for them to be concerned about it and that they are following it up with the BSPS trustees.”

Contacted by FTAdviser, a TPR spokesperson didn’t confirm this information, since the regulator “does not comment on ongoing matters”.

The Pensions Advisory Service (TPAS) is also receiving a number of calls concerning this matter, chief executive Michelle Cracknell confirmed.

She said: “This is normal as it is a big scheme and there is a lot of activity surrounding it. The questions are on a number of issues, not all on the pack.”

In the meantime, BSPS trustees have published a statement in the scheme’s website about the lack of data.

It acknowledges the fact that “some members have no personal figures in their option pack,” and that there are several reasons why this can happen.

It said: “We might not have had all the information in electronic format. In other cases, we didn’t have all the information we needed to calculate figures in time for the option packs […].

“We are working to make sure we have all this information available before the new scheme starts paying benefits and the current scheme moves into the Pension Protection Fund.”

However, there isn’t a simple solution for current members, since the trustee also acknowledge that they cannot send any more figures.

It said: “We won’t be sending you any more figures on top of what is in your option pack, because it’s not possible to do that in the time available.

“If you’re a non-pensioner and your option pack has no personal figures, you can find information about your deferred benefits in your latest deferred benefits statement. If you can’t find this statement, please phone the helpline and ask for a replacement.”

The trustees suggest that, if the member is considering a transfer, the saver or its financial adviser can “can ask the helpline for a fact sheet that sets out in more detail how pension increases in the new scheme will be calculated”.

“This will help your adviser carry out the analysis they need to advise you,” it said.

Allan Johnston, trustee chairman, did not reply to requests for comment on this matter at the time of going to press.

According to Mr Zaitschenko, “people that are receiving calls in the hotlines don't have any other information than the one in the booklets”.

He said: “It takes members 15, 20 calls to get through the pensions office” in an attempt to try to get more data.

Besides Labour MP Frank Field, which chairs the Work and Pensions Committee and has been involved in this matter, also MP Nic Dakin has shown concern over this matter.

In a post in his Facebook page, Mr Dakin said that a number of people has been raising this issue, and that “it would be much better to have this information”.

He said: “I will contact them to urge them to address the issue. It is important that this issue is raised at the roadshows as well.”

Currently, the trustees are promoting open meetings to discuss all issues regarding the pension scheme in several UK cities.

Mr Zaitschenko is advocating that a delay should be offered to the members who haven’t got all their information.

He said: “Ninety per cent don't have a problem with the information, and can make their decision. That would not harm the creation of the new scheme at all.”

According to Kusal Ariyawansa, a chartered financial planner at Manchester-based Appleton Gerrard, this is “a crazy situation”.

He said: “Funds should be available so these members can get a straight forward opinion from an adviser. At least an opinion would help, instead of you can do A, B or C.”

Mr Ariyawansa argues that a facility should be created, in which members “could have a voucher scheme or similar to go to an adviser so they can have an opinion”.

As part of the deal with Tata Steel earlier this year, the Pension Regulator gave its formal approval to a regulated apportionment arrangement (RAA).

Designed for multi-employer schemes, under an RAA the participating employer in a DB pension scheme stops participating in the scheme, and the departing employer's share of the employer debt that would otherwise be due to the scheme is split among one or more of the remaining participating employers.

In this case, the BSPS received £550m from the parent Tata Steel Group, significantly more than it would receive in insolvency, and a 33 per cent equity stake in TSUK.

maria.espadinha@ft.com