Pension sharks target 130,000 UK steelworkers

Fears savers could lose out in high-risk schemes sold over curry and chips

PENSION sharks are targeting the savings of 130,000 steelworkers during a massive restructuring of their retirement scheme.

Rogue advisers are bombarding current and former staff at Tata UK’s Port Talbot plant with phone calls, spam messages and internet campaigns.

They hope to win a share of the nest eggs of employees bamboozled by their new pension scheme, by encouraging them to transfer cash into high-risk investments.

Tactics are believed to include ‘curry and chips’ events where advisers offer free food to those attending transfer seminars.

But the City watchdog and politicians are deeply concerned some of the companies involved are recommending staff switch their lucrative defined benefit schemes for shady alternatives.

Around 11,000 members of the British Steel scheme, now run by Tata, have requested information on how much they would be paid if they transferred their pension pot to another provider. Around 1,700 members of the scheme have transferred their benefits, which can be typically worth between £300,000 and £500,000.

The Financial Conduct Authority last night said it is investigating allegations steelworkers in Port Talbot are being targeted.

Labour MP Frank Field, chairman of the Work and Pension Committee, said the changes are a ‘honeypot for crooks’.

At a committee hearing yesterday, he said: ‘If I was a member ... I bet I would be under a lot of pressure from outside forces about drawing my capital out.’ The problems began when Tata agreed a restructuring deal with The Pensions Regulator in August to ease the burden of its £15bn pension scheme, which it said could otherwise bring down the business. Savers are being given the option of either shifting to a new retirement scheme run by Tata or moving into a rescue programme set up by the Pension Protection Fund.

In either case, their retirement income is likely to be lower – and vulture financial advice firms have spotted a huge moneymaking opportunity.

They are encouraging Tata staff to move their cash out of the schemes. But steelworkers will be left much worse off. An investigation by retirement firms Pension Playpen and Echelon Wealthcare found evidence of ‘appalling practice’ by advisers.

Al Rush of Echelon said there were examples of companies charging hidden extra fees and guaranteeing returns as high as 5.5pc a year on funds when there is no certainty this will happen.

Appearing before Field’s committee, Christopher Woolard of the Financial Conduct Authority said he was aware of the approaches. Field accused the watchdog of being ‘complacent’ about the scale and seriousness of the problem.

He said: ‘I think we might see a trend in the figures that show there is a deliberate operation going on against those firms which are protecting a large amount of money for the future income and wellbeing of members, which will be dismantled by these heinous people if they get their way.’ The FCA said: ‘We plan to meet with firms in Swansea shortly to set out clearly our expectations expectation of advisers.’