Around 130,000 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).
However, according Alasdair McDiarmid, operations director at Community, a trade union for the steel sector, some 30,000 pensioners still haven’t returned their forms, which means they will be moved to the pensions lifeboat - the worst option for them, he argued.
He told the committee yesterday (13 December): “This is something we desperately need to avoid.
“We believe that there is a very strong case to suspend this consultation, to get the [Department for Work and Pensions] DWP and the secretary of state back in the room engaging with the trustees and trade unions, and try to work out how we can find a way forward that ensures that tens of thousands of pensioners […] are not ending up somewhere where they shouldn’t at the end of this process.”
Mr Field suggested that Mr Gauke would have “nothing to lose” in extending the deadline.
He said: “The more secure we get people - by getting them into the right scheme - the less there is worry about what future liabilities there might be to the state later on.
“[…] He will get the message from this committee about this.”
The chairman of the BSPS trustees, Alan Johnston, explained to the committee that there is a reason for the tight deadline, which was already extended from the original date of 11 December.
He said: “The reason for the timings is that the work has to be completed before the end of March 2018 to avoid paying an [retail prices index] RPI increase which would cost the scheme £200m.”
At the end of January, the trustees will conduct a viability assessment of the new scheme.
Mr Johnston said: “We are very confident that it [the scheme] will fly, we had 84,000 responses to our ‘time to choose’ document, 89 per cent of those have said they are going to BSPS II.
“That means that the scheme […] will have assets of £8.5-9m, it will be very viable at that point.
Moving the deadline for the members’ decision “will affect that position,” he added.
Mr McDiarmid told the committee that many of the difficulties the steelworkers are facing, such as struggling to find a qualified adviser to help them with their choices, would have been avoided if the the scheme pensioners could be automatically moved to BSPS II, “where it could be demonstrably and actuarially verified that it would be in their best interest”.
He said: “It would have been a game changer, because […] the vast majority of the 90,000 pensioners would end up in the right place for them, which is BSPS II, and would have also freed up huge resources to concentrate efforts and getting the right support and guidance to the 40,000 deferred pensioners whose decisions were obviously a bit more difficult.”
For these members, transferring out their pension is also an option, giving them a third solution regarding their future.
Mr Johnston told the committee that DWP said that the default position form the scheme members “had to be the status quo,” which is the PPF, as it will absorb the current scheme.
He said: “They didn’t want to set a precedent that other schemes might use and not be as scrupulous.”
The DWP has been approached for comment.
maria.espadinha@ft.com
