11 probed in scandal of steelworker pensions

PENSION guardians from the City watchdog are investigating 11 financial advisers which targeting vulnerable savers in the British Steel scheme.

The scheme is being restructured as part of a deal to save plants at Port Talbot in South Wales and Scunthorpe in Lincolnshire, with members facing cuts to their payouts.

It has triggered a feeding frenzy for advice firms, many of whom claim steelworkers can earn better returns if they transfer their savings out of the pension scheme and into other investments. But workers who do this face much higher risks and could lose everything.

There are fears many are being urged to do something which is not in their best interests by vultures only interested in pocketing a fee. But the Financial Conduct Authority is cracking down after a public outcry.

It summoned 151 advisers to seminars last month in Port Talbot and Doncaster to remind them of their duty to protect savers’ nest eggs. There is anger over the way some firms have been behaving, with rumours advisers are making a 700-mile round trip from Newcastle to South Wales to squeeze cash out of those affected.

Based on their work, the FCA has probed 11 advice firms and already stopped three from advising on pensions transfers.

Steelworkers willing to transfer out of the lucrative British Steel defined benefit pension plan will swap guaranteed payouts for life for a one-off lump sum which can be very large.

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

But payments are not guaranteed and there is no safety net if the markets suddenly take a turn for the worse. And advisers who process a transfer can pocket thousands of pounds in fees for a few hours’ work.