Defined Benefit  

British Steel pension transfers hit £1bn

British Steel pension transfers hit £1bn

More than £1bn has been transferred out of the British Steel Pension Scheme (BSPS) to date, the scheme's trustee has revealed.

A spokesperson from the scheme’s trustee told FTAdviser today (8 February) that BSPS had processed 2,600 pension transfers equating to a total value of £1.1bn between March last year and now.

Following an agreement with the regulator last year British Steel workers were asked to decide before 22 December whether to move their defined benefit pension pots to a new plan being created, BSPS II, or stay in the fund, which would be moved to the Pension Protection Fund.

But of the approximately 122,000 members about 43,000 are deferred, which means transferring out of their pension and giving up the associated guarantees was also an option for them.

Members have until 28 March to transfer their pensions out, which is when the exact total transfers figures will be disclosed.

Advisers think the end figure could be much greater still.

The spokesperson said: "The total number of transfers out of the BSPS will not be known until the end of March. To date, since March 2017, the scheme has paid around 2,600 transfers (around £1.1bn).

"Members seeking a transfer should seek to have paperwork in by 16 February to allow time for the payment to be processed before 28 March."

FTAdviser reported in November that several steelworkers appeared to be transferring out of 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 regulator eventually caught on to the danger and in December announced it had stopped three firms giving DB pension advice as part of its work on BSPS.

Megan Butler, the FCA's head of supervision, revealed the names of the firms to the work and pensions committee at a hearing later in the month when she named Active Wealth, Pembrokeshire Mortgage Centre and Mansion Park.

But she could not give the name of a fourth firm the FCA was in the process of taking action against.

Yesterday (7 February) it became apparent County Capital Wealth Management, also trading as Pension Review Service, was the latest firm asked to stop giving transfer advice.

According to a letter to Frank Field from the FCA's chief executive Andrew Bailey, dated 18 January, the regulator had reviewed 129 client files related to BSPS at 21 firms and found in a third of cases the advice given was unsuitable, while in 16 per cent of the files it was unclear.

This means potentially £360m could have been transferred on bad advice and a further £176m could be inconclusive cases.

Henry Tapper, founder of Pension Playpen, who was involved in highlighting the debacle early on alongside adviser Al Rush, said he believed the total transfer figure would be closer to £3bn.

He said: "They have underestimated the numbers. They haven't got the money through yet because they have got a massive number of transfers to process between now and the end of March and there is a backlog."