The trustees of the British Steel Pension Scheme (BSPS) have decided to honour the original transfer value given to a steelworker, who had been unable to transfer out due to delays with the scheme.
FTAdviserreported last week that David Smith, a former worker at Tata Steel, had made a complaint to the Financial Ombudsman Services (FOS), after facing a three-month delay in receiving the cash equivalent transfer value (CETV) for his pension.
This had led to him missing the deadline for making a transfer request from the old scheme and meant he was automatically transferred to the new one, which gave him a lower transfer value.
In a letter sent to Mr Smith last week (27 September), Mike Donohue, BSPS scheme secretary, wrote it would not normally have been possible for the new scheme to pay a transfer on the basis of a quotation given by the old scheme.
However, due to the volume of transfer activity in the pensions office, the trustees had not provided this transfer quote as soon as they should have, he added.
He said in the letter: "We apologise for this. In recognition of this delay, a non-statutory transfer value quotation has exceptionally been provided to you on the same basis as previously applied in respect of the old BSPS."
Mr Smith has been given a new deadline of 27 December 2018 to submit all the necessary transfer documentation.
Mr Smith had made his transfer request on 25 October 2017, a few weeks after it was announced that steelworkers would have to choose between transferring to a new pension fund, or to remain in the old plan, which would later go to the pensions lifeboat fund.
This came as a result of a restructuring deal reached with their employer, which was signed off by the Pensions Regulator last August, ending a long-running dispute between pension holders and the business.
According to documents seen by FTAdviser, despite making a request in October, Mr Smith only received his CETV on 25 January 2018 – three weeks before the cut-off point before which he would have had to submit his transfer request.
Mr Smith said he had tried to arrange a meeting with the financial adviser provided by his employer but was only able to see him on 21 February, due to work load and holidays.
When he requested a transfer value from the new scheme, the British Steel Pension Scheme II, he received a quote which was 22.7 per cent lower than his initial one.
The reason was that, unlike the previous plan, BSPS II does not provide increases to benefits accrued before 1997 and it uses the consumer price index (CPI) for indexation, instead of the retail price index (RPI).
Alistair Rush, principal at Rutland-based Echelon Wealthcare, who organised free counselling sessions for steelworkers, had visited the BSPS office in Glasgow.
He said: "I saw the steady, methodical and quiet operation, the tall piles of paper applications still waiting to be processed, the islands of empty desks, the absence of temporary staff to address matters.