Labour MP for Stockton North Alex Cunningham, who has constituents affected by the failure of the pension scheme, said he heard of stories where people were being treated to “chicken in a basket” with a view to being persuaded to transfer their pensions out and into investments elsewhere.
He warned people needed to be given better access to help when decisions need to be made quickly.
The British Steel pension scheme gave members until 22 December to decide whether to move their defined benefit (DB) pension pots to a new plan being created, BSPS II, or stay in the current fund, which will be moved to the Pension Protection Fund (PPF).
The failed scheme has about 130,000 members of which 43,000 are deferred, which means transferring out of their pension is an option for them.
It is alleged that thousands of members did not receive all the information necessary about their pensions to be able to make an informed decision on the matter.
More than a hundred of complaints have already landed with the Pensions Ombudsman about the scheme.
FTAdviser reported in November that several steelworkers appeared to be transferring out their pensions after being lured by cheap deals by unregulated introducer firm Celtic Wealth Management & Financial Planning, which then referred the clients to advice firm Active Wealth.
The Work & Pensions Select Committee is due to question financial advisers about the advice given to steelworkers to transfer their defined benefit pensions out of the scheme.
Mr Cunningham told delegates at the Pensions and Lifetime Savings Association (PLSA) trustee conference in London on 6 December the government needed to ensure people could access the services they need even if it is guidance and not fully regulated advice.
He had been told beforehand by an audience member that some people in areas such as Wales were facing waiting times of up to two months to get an appointment at Pension Wise, the government’s free at-retirement help service.
He said: “I want to hold the government to account to ensure we see that gap close considerably so that people can access information and guidance very quickly because people have to make decisions quickly, we just have to look at what’s happening with the British Steel pension situation where people are not getting the proper [help] they require.
“We see what we can only describe as sharks circling people and trying to persuade them that the best thing for them to do is to take their defined benefit pot out and allow them to invest it all.
“We don’t have the advice systems in place enough in order to provide them with a solution.”
Mr Cunningham also said he was worried about details in the government’s plans for the new single guidance provider to be launched next year, which will see Pension Wise, The Pension Advisory Service and the Money Advice Service merged into one.
The bill for it is due its second reading in the House of Commons in January having started in the Lords last June.
Although admitting the bill had been “much improved” Mr Cunningham said he was concerned bringing the bodies together was all about cost savings for the government.
“One of the things that I will be concentrating on is to ensure that the efficiencies that are being driven from the amalgamation actually are invested back in the service so we don’t see that [provision] gap get greater,” he said.
“We also need to understand how [the government] sees the new body operating.”
He said there was a worry the hammering out of the details of the scheme will be pushed to a later date.
“I’m worried about the detail now because I want to know how are they going to deliver it. So often we’ve seen situations where things have changed across the market and everybody then relies on their IT system in order to deliver [guidance] and the face to face consultations go by the way and so do even telephone [services],” he said.
Mr Cunningham also supported the idea of changing the £500 advice allowance for a “credit” to be given to consumers.
carmen.reichman@ft.com
