Scale of steel pen­sion cri­sis is ‘enor­mous’

Llanelli Star - - LETTERS -

A MIS-SELL­ING scan­dal which has re­sulted in re­tired and cur­rent steel­work­ers los­ing tens of thou­sands of pounds each from their pen­sion pots could be the big­gest cri­sis of its kind to hit Wales, ac­cord­ing to a fi­nan­cial ex­pert.

The scan­dal dates back only two years to the clo­sure of the Bri­tish Steel fi­nal salary pen­sion scheme. The scheme ran for many decades, pro­vid­ing pen­sions to gen­er­a­tions of work­ers em­ployed suc­ces­sively by Bri­tish Steel, Corus and Tata.

Then in 2017, at a time when Tata had been threat­en­ing to pull out of steel man­u­fac­tur­ing in Bri­tain, it de­cided it could no longer af­ford a fi­nal salary – or de­fined ben­e­fit – pen­sion scheme. In­stead it launched a less gen­er­ous de­fined con­tri­bu­tion scheme, where the amount of work­ers’ fu­ture pen­sion pay­ments would de­pend on the per­for­mance of the scheme’s in­vest­ment port­fo­lio.

Em­ploy­ees were given the op­tion of al­low­ing their fi­nal salary pen­sion pots to be frozen, or to be trans­ferred to a new provider. Fi­nan­cial ad­vis­ers at that point de­scended on steel towns like Port Tal­bot and Llanelli, in many cases ad­vis­ing work­ers to trans­fer their pen­sion pots. In many cases they charged ex­or­bi­tant com­mis­sions. Al Rush, a fi­nan­cial ex­pert who has been help­ing work­ers make com­pen­sa­tion claims, said: “It is dif­fi­cult to over­es­ti­mate the im­pact of this scan­dal on steel towns.

“When tens of thou­sands of pounds are lost to each steel­worker who trans­fers their pen­sion pot, it’s the whole com­mu­nity that suf­fers be­cause the money is taken out of the lo­cal econ­omy.

“The scale of what has hap­pened is enor­mous, with many mil­lions of pounds hav­ing been lost. Some fi­nan­cial ad­vis­ers have charged com­mis­sion of up to 3% of an in­di­vid­ual pen­sion pot’s value, en­rich­ing them­selves but re­duc­ing the value of steel­work­ers’ pen­sions.

“It’s the big­gest mis-sell­ing scan­dal to hit Wales.

“Steps are be­ing taken to get com­pen­sa­tion for those af­fected, but no-one will be in a bet­ter po­si­tion than they would have been if they hadn’t trans­ferred their pen­sion pot.”

An­drew Stan­lake has worked at Trostre Works in Llanelli for 34 years. He said: “Like a lot of the boys, I was per­suaded to trans­fer my pot. I just hope I can get com­pen­sated.”

The Pen­sions Om­buds­man and the Fi­nan­cial Con­duct Au­thor­ity are in­ves­ti­gat­ing the scan­dal.

Aber­avon Labour MP Stephen Kin­nock said: “It’s deeply con­cern­ing that these vul­tures swooped and per­suaded work­ers to trans­fer their pen­sion money. Un­for­tu­nately it led to a sit­u­a­tion where many work­ers have

been left worse off than they would have been.”

A spokesman for Tata re­ferred us to the trustees of the Bri­tish Steel Pen­sion Scheme. The trustees’ web­site in­cludes a state­ment of ad­vice to mem­bers of the scheme who are con­tem­plat­ing trans­fer­ring their pen­sion pot to an­other provider.

It says: “You should think care­fully be­fore trans­fer­ring out. You would be giv­ing up guar­an­teed fu­ture pen­sion in­come in re­turn for in­come that might not be guar­an­teed and could vary de­pend­ing on how you man­age it. Even though trans­fer val­ues can seem very large, trans­fer­ring out is un­likely to give you as much to­tal pen­sion in­come over your life­time as the scheme, on a like­for-like ba­sis.”

A spokesman for the Com­mu­nity trade union said: “Un­for­tu­nately, le­gal con­straints around who is able to pro­vide fi­nan­cial ad­vice meant that our hands were some­what tied and we weren’t able to be as forth­right as we would have wanted to be in terms of warn­ing our mem­bers about some of the pit­falls of trans­fer­ring pen­sions out of a de­fined ben­e­fit scheme.

“We have been ap­proached by a small num­ber of mem­bers who feel that they may have been mis-sold trans­fers and we are guid­ing them through the pro­cesses avail­able to seek com­pen­sa­tion.”

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