On the go: The Financial Conduct Authority will be monitoring pension transfer requests from the Old British Steel Pension Scheme, as the scheme has exited its assessment period at the Pension Protection Fund.
According to a letter sent to its members, the scheme, which agreed to a full buyout with Pension Insurance Corporation in October 2020, exited its PPF assessment period on November 9.
Jonathan Hazlett, managing director of Open Trustees, which runs the scheme, stated that despite the deal being expected by the end of 2021, It will now be completed by late summer 2022 as the “process is taking longer than expected”.
“This is because of recent legal rulings affecting pensions in general, not just this scheme,” he added.
Until then, because the scheme has effectively left the pensions lifeboat, there will be an increase in benefits for some members since PPF levels are less than full-scheme benefits.
At the pensions lifeboat, non-pensioner members receive compensation based on 90 per cent of what their pension was worth at the time the employer became insolvent.
Old BSPS members will also be able to transfer out of the scheme, which was not allowed since its PPF assessment period — which started in March 2018.
As a result, the “FCA is working with the trustees of the scheme to monitor requests to transfer out and the firms who are advising members on their options”, according to a joint statement by the watchdog, the Pensions Regulator and MoneyHelper.
“All advisers should be clear on the FCA’s expectations when offering advice to members of the scheme. Where the FCA sees unsuitable advice, or bad practice, it will take action,” it stated.
“The FCA, TPR and MoneyHelper believe transferring out of a DB pension scheme is unlikely to be in the best interests of most consumers,” the statement added.
Three years ago BSPS members were asked to decide whether to move their defined benefit pension to a new plan, BSPS2, or stay in the existing fund — which was then moved to the PPF as part of a restructuring of pension liabilities — or to transfer out altogether.
As a result, about 8,000 members transferred out of the old scheme, with transfers collectively worth about £2.8bn.
But concerns about the suitability of the transfers were soon raised, leading to an intervention from the FCA that resulted in a number of advice companies — key players in the debacle — stopping their transfer advice service, while others went out of business.
A subsequent suitability review led to almost two-thirds of DB advisers quitting the market, with the FCA saying there are now about 1,200 advisers holding these permissions compared with 3,000 in 2018.
