Steel workers’ choose ‘best option’

The consultation over Tata steelworkers’ pensions closed this week (January 29) after nearly 100,000 workers made key decisions over their future retirement income.

The vast majority of the 97,000 scheme members – 86 per cent – opted to move into the new British Steel Pension Scheme (BSPS), with the remaining 14 per cent deciding to stay with the current scheme which will be transferred into the Pension Protection Fund (PPF).

The PPF is a government-backed lifeboat for pension schemes of companies that have gone into insolvency.

The consultation comes after it was announced last year that the original ÂŁ15bn BSPS would be separated from Tata Steel so that a possible merger with steel giant ThyssenKrupp could go through and ensure the future of the business.

Although the new BSPS will not offer increases each year as high as the previous scheme, it will be in most cases more generous than PPF.

Those who did not respond to the consultation will automatically be moved to the PPF.

BSPS Trustee Chairman Allan Johnston said that he was “pleased that so many Scheme members took the time to choose the outcome that was best for them based on their personal circumstances.

“The New BSPS offers benefits that for most members are the same or better than the PPF and around 83,000 members have chosen to switch to the New Scheme,” he noted.

“The PPF provides a valuable safeguard for members of occupational pension schemes and around 39,000 scheme members will remain in the current scheme when it starts its formal PPF assessment period at the end of March unless they take a transfer.  Their benefits will be aligned to PPF compensation levels.”

Unite national officer Tony Brady said that the vast majority of Unite members participated in the consultation.

‘Bittersweet pill’

“We accept that agreeing to changes in the pension was a bittersweet pill to swallow for many but we still believe that it was the very best option for our members and the future of the industry,” he said.

Members also had the option of transferring their pension as a lump sum so that they can invest it in personal plans under rules introduced in 2015.

Reports that financial advisers were preying on steelworkers who had considered drawing out their pensions — asking for massive fees and persuading them to take on risky investments –  emerged last year.

As UNITElive reported, steelworkers were offered returns of 10 per cent a year on their pension lump sum and were then hit with substantial hidden fees – one worker was reportedly charged £20,000 to withdraw his pension.

Another firm reportedly baited people with “curry and chips” nights, offering free food as they touted their investments convincing people to move their pension pots out of defined benefit schemes.

The stories have prompted an ongoing investigation by the Financial Conduct Authority (FCA) and now the South Wales police have also launched a probe into whether some steelworkers may have been victims of pension fraud.

Brady said that Unite had put out continuous statements to members in the last several months warning against the dangers of dodgy financial advice.

“Our advice was clear from the beginning – that there would opportunistic advisers out there looking to make a quick buck from people who might not be financially knowledgeable. We raised the issue with the Labour Party and asked our senior reps to report the names of any advisers plying their trade around steel plants and other sites.”

“Thankfully, as far as we are aware, Unite members took our advice and made the decisions that were right for their personal circumstances.”