MPs were told around 13,000 steelworkers who requested a pension transfer value from the British Steel Pension Scheme (BSPS) have struggled to find a qualified adviser to help them using the Financial Conduct Authority register.
Stefan Zaitschenko, a former Tata Steel worker who helps run a Facebook group for members of the old scheme with 5,100 participants, told the Work and Pensions select committee today (13 November) that the high volume of pension transfer requests was a burden for local financial advisers, making choices harder for the steelworkers.
Steelworkers have 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.
FTAdviser reported in November that several steelworkers are struggling to get a financial adviser to take them as a client and advise them their pension transfer, amid concerns about a tight deadline and future liability.
Mr Zaitschenko said: "People that came in first [to see a financial adviser] got served first.
"Most of them got good advice, but then we have a pool of people that need a financial adviser quickly.
"A lot of the cash equivalent transfer values was due to expire by 11 December."
Rich Caddy, shift operations manager at British Steel in Teesside, is one of the steelworkers affected.
He told the committee that after finding a financial adviser that he was comfortable with he was forced to look for another one, since he was informed that the firm was at capacity.
Mr Caddy also said that it is difficult to find a professional suited for pension transfers.
He said: "The advice we have been given is to look in the [Financial Conduct Authority] FCA register, but only after looking at the drop-down menu [of a firm's register page] I found that they were not able to give pension transfers advice.
"This process could be made so much easier if I was able to find a pension transfer specialist just by putting in a post code."
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.
Pensions expert and founder of Pension Playpen Henry Tapper explained that there is a bias in the advice process.
He said: "A lot of IFAs don’t have a process to collect fees if the recommendation is not to transfer. There was a bias to transfer to a product, and to a product where the IFA can be paid."
Mr Tapper said that in some cases the steelworkers pension money is going into self-invested personal pension (Sipp) "run by trustable organisations, which after are transferred to other structures […] with exit fees of typically 5 per cent”.