Actuaries feel shame and guilt that Port Talbot was allowed to happen on their watch, a conference has heard.
Henry Tapper, director of First Actuarial and founder of the Pension Playpen, told the third Great Pensions Debate at the Royal Air Force Museum in Hendon today (7 November) there were concerns in the actuarial community about how the British Steel transfer debacle had unfolded.
This comes after it emerged about £3bn was believed to have been paid out in defined benefit transfers to some 8,500 British Steel members by July this year.
But Mr Tapper said new TVC rules have begun to highlight a bigger problem for actuaries. He said where miss-selling has been proven it will be possible for clients to make a claim against the TVC, which raised the question of who is going to foot the bill.
He said: "This is a big worry, especially for all of us at First Actuarial."
Organiser of the event Alastair Rush, principal at Rutland-based Echelon Wealthcare, said those affected by the British Steel debacle simply "cannot get their head around" the recent changes to transfer value calculations – from transfer value analysis to transfer value comparator and the resulting "void and complete lack of information" had left them "utterly vulnerable".
The transfer value comparator (TVC) is part of a new set of rules introduced by the FCA in October in response to the evolving debacle and increased pension transfer requests following the pension freedom reforms.
This comparator will show, in graphical form, the transfer value offered by the DB scheme and the estimated value needed to replace the client's DB income in a defined contribution environment. It is expected to deter more clients from transferring out.
The TVC will be included in the appropriate pension transfer analysis, or Apta, which will replace the current transfer value analysis (TVas).
Mr Tapper said he foresees the role of IFAs in managing pension liabilities to increase substantially as a result of the rules.
He said: "Trustees are waking up to the fact that DB transfers aren’t going away, and everyone is awakening to the fact that last year we had £36.8bn transfers out of defined benefit schemes, and that in the first quarter of 2018 we had £11bn.
"What we will see is the The Pensions Regulator and the Financial Conduct Authority will become a lot more cautious and cumbersome on some of the big scheme changes.
"We haven't even got to first base on organising ourselves. There is a need for us to reposition ourselves, to not just supporting trustees, but also members."
Mr Tapper called out to IFAs, asking if any would be willing to work together with actuaries and trustees to help fix some of these issues.
He said: "What transfers have done is triggered a sense of personal responsibility for people, which is more obvious to IFAs but not an obvious equation for actuaries."