Defined Benefit  

Steelworkers criticise government’s DB white paper

Steelworkers criticise government’s DB white paper

Members of the British Steel Pension Scheme (BSPS) have criticised the government’s decision not to take up recommendations that trustees should be able to move scheme members without their consent.

The work and pensions select committee had recommended a system of deemed consent, where trustees would have been able to transfer members without consent to make sure they received better benefits than they would in the Pension Protection Fund (PPF).

At the moment trustees can only do this if the receiving scheme is actuarially certified as providing equal or better benefits than the previous one.

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But in its defined benefit (DB) white paper, published on Monday (19 March), the Department for Work and Pensions said it wasn’t pursuing this recommendation, even though it said there were "lessons to be learned from all aspects" of the BSPS case.

Stefan Zaitschenko, a former Tata steelworker who helps run a Facebook group for members of the old scheme, wrote an open letter to the committee.

He said: "At the committee session on 13 December 2017, all parties (union/trustee/members) supported the change, which was too late for BSPS members but would have helped so many affected in the future."

Mr Zaitschenko said the government recognised the current system was "detrimental to members and complex".

Frank Field, chairman of the work and pensions committee, said introducing deemed consent would follow the same principle of auto-enrolment.

He said: "Members are entirely free to choose but if, for whatever reason, they do not exercise that choice, they are defaulted into the option most likely to be in their financial interests.

"In the case of British Steel, 25,000 members were, in effect, defaulted into the PPF. In many cases this would have been against their interests."

Mr Field argued that he isn’t calling for a change of Government approach to pensions, but "more a consistency of approach".

He added: "Should any more cases like British Steel come along – and I have every expectation they will – we will no doubt revisit these arguments."

If deemed consent was in place, some 25,000 BSPS members, who were automatically moved to the PPF because they didn't make a choice about the future of their pensions, could have been enrolled in the new scheme, BSPS II.

The DWP said: "The government has considered this very carefully throughout the period since the consultation in 2016. We accept that, for some members, the current system may lead to sub-optimal outcomes."

Even though the government said that it "will seek to better understand the circumstances and motivations" of the BSPS members, it added that a change in the current rules "might be misused by others, either by accident or design, with unwelcome consequences more widely for the protections scheme members enjoy".Around 130,000 steelworkers had to choose by 22 December it they wanted to move their DB pension pots to the new plan or stay in the current fund, which would be moved to the pensions lifeboat.