Defined Benefit  

Field pledges to fight government on pension transfers

Field pledges to fight government on pension transfers

Labour MP Frank Field, chairman of the Work & Pensions select committee, has pledged to push the government to act on MPs' recommendations about the British Steel scandal.

In its report about the British Steel Pension Scheme (BSPS), published earlier this month, the committee said many steelworkers were "shamelessly bamboozled" by financial advisers, with their pensions ending up in"unsuitable funds characterised by high investment risk, high management charges and punitive exit fees".

Mr Field told FTAdviser: "The government will have to come back to us [about this report], so there is vested interests in all of them to actually act, to be accountable to us and hopefully they agree and give us what they are setting as action, because that is what is lacking here, action.

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"But otherwise of course, as with all our other committee reports, if there are unsatisfactory replies we actually continue working on them, pushing, pushing and pushing, to get the change in policy that our membership believes is right."

Regarding the Financial Conduct Authority (FCA), one of the committee's recommendations is a ban on contingent charges.

Mr Field argued that the HM Treasury "will open themselves to a scandal" if they don't act as a consequence of the report.

He said: "The Treasury needs to say 'look, which side are you on?' We set you up because you're on the consumer side, not on the industry side, now get yourself up to date."

Rory Percival, former technical specialist at the FCA, who now runs his own consultancy, said without a recommendation of the Treasury select committee (TSC) it is extraordinarily unlikely that the FCA will ban contingent charging.

He said: "It all then gets a bit political, because yes, they [the FCA] have to take it seriously, because the Treasury Select Committee has recommended, but then there is the counterbalance that they wouldn't wanted to be directed by the committee or by the government, as it is an independent body.

"So, it is a very difficult set of discussions that they would have internally on the back of that."

According to Martin Bamford, chartered financial planner for Surrey-based Informed Choice, the FCA can be influenced by the Treasury through appointments and lobbying.

He said: "In respect of the British Steel fiasco, I get the impression the FCA is acting defensively.

"Rather than being confrontational about the issues, Frank Field and his committee might get better results with a more diplomatic approach.

"Whenever I bump up against officious organisations, I find they refuse to move when feeling cornered, but are usually very willing to change if given the opportunity to present it as their own ideas."

Around 130,000 steelworkers had to choose to move their defined benefit (DB) pension pots to a new plan being created, BSPS II, or stay in the current fund, which would be moved to the Pension Protection Fund (PPF), by 22 December.