Defined Benefit  

British Steel pension transfers estimated to hit £3bn

British Steel pension transfers estimated to hit £3bn

Trustees of the British Steel Pension Scheme (BSPS) are believed to have paid out £3bn in defined benefit transfers to some 8,500 members.

Pensions expert and founder of the Pension Playpen, Henry Tapper, revealed the figure yesterday (10 July) at The Great Pensions Debate in Port Talbot.

He said he had arrived at the estimation after conversations with the Department for Work & Pensions (DWP) and The Pensions Regulator (TPR).

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Mr Tapper said: “There were 17,000 transfer value requests out of 43,000 deferred members. It absolutely overwhelmed the administrators. The Glasgow office was unresponsive for months.”

The BSPS trustees told FTAdviser the BSPS had issued about 15,000 transfer value quotations during the year to 31 March, of which just less than 7,850 resulted in a request from members to transfers out. But it would not give a transfer value.

According to data previously revealed by the scheme trustees the scheme processed 2,600 pension transfers equating to a total value of £1.1bn, between March 2017 and the beginning of February.

About 130,000 steelworkers were asked to choose by 22 December 2017 it they wanted to move their defined benefit (DB) pension pots to a new scheme being created, BSPS II, or stay in the existing fund to be moved into the Pension Protection Fund (PPF).

FTAdviser reported in March that steelworkers who requested a pension transfer but were hampered because trustees failed to process this in time, could see their quoted retirement pot slashed by about 20 per cent in the pensions lifeboat.

Some 25,000 members will end up in the PPF, and it is yet unknown how many will see their pensions reduced.

Since the introduction of pension freedoms in 2015, the number of people transferring out of their final salary pensions has been soaring, as savers seek to take advantage of sky-high transfer values and to move their nest eggs into DC schemes in order to access their cash.

According to data from the Financial Conduct Authority (FCA), £20.8bn was transferred out during 2017, more than double of the volumes registered in the previous year.