Defined Benefit 

MPs to produce British Steel pension report

MPs to produce British Steel pension report

The work and pensions select committee will publish a specific report on the British Steel Pension Scheme (BSPS) at the start of this year, Labour MP Frank Field told FTAdviser.

Under its work on pension freedoms, the committee held hearings with steelworkers, financial advisers and regulators amid concerns about the financial advice being given the defined benefit (DB) scheme members.

Mr Field has branded the Financial Conduct Authority's (FCA) regulatory action in this matter as “grossly inadequate”.

Steelworkers had until 22 December to decide whether to move their 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 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 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.

Mr Field said: "The British Steel Pension Scheme saga, ailing retailer Toys R Us, collapsed Monarch Airlines – all of the ongoing series of individual companies and pension schemes that draw our attention - continue to expose the failings of the current regulatory regime.

"The remarkable events around BSPS have come to represent some of those core issues: as I noted in the evidence session we dedicated to this ‘honeypot for scammers’, the FCA’s actions so far make [The Pensions Regulator] TPR look like it has had its spinach."

Both regulators, alongside The Pensions Advisory Service (Tpas), have in the meantime written to steelworkers that asked for a DB transfer value warning them of the dangers of cashing out their savings.

According to Mr Field "'too little, too late' seems to be the watchword of existing pensions regulation".

He added: "This is part of a live inquiry into pension freedom and choice that will produce at least two more reports early in the New Year, one specifically on BSPS."

This year, the committee will also be focusing on "the potential of collective defined contribution to help solve the nation's 'pension problem'," Mr Field said.

These schemes are also known as a form of "defined ambition" scheme and differ from DB schemes in that they do not guarantee certain incomes in retirement.

Instead, collective defined contribution schemes have a target or "ambition" amount they will pay out, based on a long term, mixed risk investment plan.

The committee launched a consultation on this subject in November.

Mr Field said: "One of the key areas we are seeking evidence on is how this model of collective retirement saving might work within a broader pensions culture that is increasingly orientated towards individual freedom and choice.”