Day the pension vultures swooped on our steelworkers

As locals in the small Welsh town of Port Talbot are talked into moving their retirement funds to risky investment plans ...

TAIBACH rubgy team’s clubhouse looks like it hasn’t been decorated since the Seventies. Chipped wooden tables and a plastic Christmas tree have been positioned around the bar and, apart from a bright cabinet displaying a collection of rugby jerseys worn by former Wales hooker and local hero Richard Hibbard, the room is poorly lit.

Sitting at a booth in the corner nearest the door are five men who look like ordinary punters having a lunchtime pint at their local. In fact, if it weren’t for the piles of paperwork strewn across the table in front of them, there would be no clues to the very serious business behind their meeting.

The paperwork shows that these five lifelong Port Talbot steelworkers, most of whom are in their late 50s, have given up the generous final salary pensions offered by their company, Tata.

In some cases, they have cashed in annual incomes worth more than £26,000 from the British Steel Pension Scheme.

In exchange, they have received sums of up to £610,000 — an astronomical figure for anyone, let alone someone from a small village outside Port Talbot in South Wales where the average house price is just £117,000.

It is a life-changing decision and some of the men are understandably excited by the prospect of being richer than they had ever dreamed. But as they share their stories, it starts to dawn on them that they may have made a grave mistake.

Money Mail has travelled to Taibach, in the shadow of the Port Talbot steelworks, to investigate allegations that thousands of workers are being badly advised by financial advisers who stand to gain a slice of their pension pots.

The five men who have agreed to meet us at the rugby club are among 130,000 members of the failing British Steel Pension Scheme who have been given until December 22 to make an incredibly difficult choice.

The pension scheme, which is struggling to cover payouts to retirees, is being rescued by the official pensions lifeboat fund and workers face losing some of the income they were expecting in old age.

MeMBeRS have been told they can stay put after the scheme is taken over by the Pension Protection Fund and accept a possible 10 pc cut in their retirement income, lower annual increases and have their payouts capped at a maximum of around £35,000 a year.

Alternatively, they can switch to a newer, but less generous version of the steelworkers’ pension scheme.

On its website, the British Steel Pension Scheme says most, but not all, steelworkers will be better off switching to the new plan.

Yet those who do nothing will automatically be moved into the Pension Protection Fund and lose some of their income. Any steelworker who is more than a year from their retirement age — typically 65 — has a final option that is proving hard to resist.

They can ditch their British Steel pension entirely and turn the income they were owed into a cash lump sum. This money must be transferred to another type of pension plan where it can be invested in shares, bonds or other assets.

For example, a 57-year- old steelworker entitled to around £10,000 a year at age 65 might be able to transfer around £310,000 into a stock market-linked plan.

Back at the rugby club, all five steelworkers have chosen to cash in their pots. But after the initial euphoria of learning that they were sitting on a goldmine, they have been left terrified that they may end up with a fraction of the pension they expected to receive.

Both the City regulator and a committee of MPs are investigating concerns that steelworkers are being advised to put their lump sums into dangerous investment schemes where they risk losing money.

evidence submitted to Frank Field MP, the chair of the Work and Pensions Committee, suggests that advisers are organising ‘chicken in a basket’ events where steelworkers are given free food and urged to transfer their final salary pensions to little-known investments.

In some cases, advisers are pocketing giant fees for a few hours’ work in recommending that scheme members switch into these plans.

These charges can be as much as 3 pc, meaning that the adviser pockets £18,000 from a £600,000 transfer. The committee is concerned that some savers are making an irreversible mistake when they would be better off sticking with the guaranteed income from the steel pension scheme. It fears others are getting unclear advice and have no idea they’re putting their life savings into inappropriate investments.

Money Mail has agreed to change the names of the five steelworkers.

Brian Jones, who has come accompanied by his wife Margaret, said he thought he had ‘won the lottery’ when he realised they could get their hands on £500,961 if he transferred his pension out of the British Steel scheme.

The 58-year-old, who is recovering from knee replacement surgery, heard about the huge sums on offer for pension transfers from a colleague. Pension rules state that anyone transferring more than £ 30,000 out of a final salary scheme has to take financial advice from a qualified professional.

With so many steelworkers trying to figure out what to do with their pensions — and with a deadline approaching — many advisers in the Port Talbot area are fully booked.

But Brian’s colleague knew of a firm that could get him an appointment. He approached Celtic Wealth Management, who said they were not a financial advice firm but could put him in touch with a man called Darren Reynolds.

Mr Reynolds, a qualified financial adviser whose company, Active Wealth, is based in Willenhall, near Wolverhampton, made the 220-mile round trip to visit Brian and his wife and discuss their options.

It is unclear what Mr Reynolds may have been told during the interviews which may have influenced his advice. However, documents seen by Money Mail show that Brian received figures indicating he was due to get £25,859 a year when he retired at the age of 65. If he gave that up, he would get more than half a million pounds. Brian was sure he wanted the cash a Mr Reynolds signed off the trans Documents show Brian was charg £1,500 for the advice.

Money Mail took a copy of t recommendation and showed it Robert Reid, a highly-regard pensions expert at consultancy fi Canscot Solutions. He was extrem critical. Mr Reid says: ‘From wha have seen, this adviser starts off w the objective of moving the mon These people just think that they a getting a transfer and that is that no other option is considered.

‘ The figures and terms bei quoted in the report don’t me anything to most people and there no explanation of the fund they a invested in and how it works.

‘Basically, you’re expecting som one who has taken no interest their pension up until now suddenly have a masters degree finance. From the evidence I ha seen here, I would not have told t person to transfer.’

Brian says he made it clear to Reynolds that he wanted the mon somewhere he had already heard such as his bank account or a lar