Defined Benefit  

MPs urged to look at British Steel ombudsman decision

MPs urged to look at British Steel ombudsman decision

An adviser has called on MPs to consider further action after the Pensions Ombudsman rejected a number of complaints against the trustees of the British Steel Pension Scheme.

Last week, the Pensions Ombudsman decided to not uphold four complaints concerning the lack of information provided by scheme trustees on cash equivalent transfer values and early retirement factors when steelworkers had to decide whether to move their defined benefit pension pots to a new scheme.

FTAdviser has learned that MPs in the South Wales area have now been asked to consider taking further action, with many steelworkers “disappointed” at the outcome.

Alastair Rush, principal at Rutland-based Echelon Wealthcare, told FTAdviser he is in discussions with MPs to explore other avenues, including legal action to quash the findings of the Pensions Ombudsman.

According to Mr Rush, the main issue with the ombudsman's findings centred on the scheme’s trustees outsourcing the decision making to outside the Pensions Ombudsman’s remit.

Mr Rush said: “The biggest problem with this decision is that the ombudsman says trustees outsourced to investment management companies and actuaries with their decision making and so therefore it is not responsible for these trades or bodies.

"Trustees should have liability for the people they outsourced to.”

But the Pensions Ombudsman said the complaints were found to be unsuccessful due to a number of reasons.

Anthony Arter, Pensions Ombudsman, said: “The determinations speak for themselves.

“The findings are based on broader points than just this particular issue, and the determinations explore this aspect in considerable granular depth but this is not reflected in the comment you have received”.

The Pensions Ombudsman accepted 229 complaints in total but gave final considerations in four lead cases.

The circumstances of each of the four lead cases differed slightly in terms of whether the member took a CETV; when, in relation to the change of calculation basis the member took their CETV; or whether the member retired early.

BSPS members were asked to decide by December 2017 whether to move their DB pension to a new plan, BSPS II, or stay in the existing fund, which was then moved to the Pension Protection Fund as part of a restructuring of pension liabilities.

As a consequence, the calculation methodology behind CETVs and ERFs was changed on 1 April 2017, with the result that members who requested a transfer value or retired early from the BSPS after that date, received significantly higher benefits than those who had already transferred out or taken early retirement.

At the time it was alleged that thousands of members didn't receive all the information necessary about their pensions to be able to make an informed decision on the matter.

But in the four cases the Ombudsman found the trustees’ communications were not misleading and they had obtained and considered appropriate advice to reach their decisions in respect of the future of the scheme and changes to the CETV.