Hundreds - maybe thousands - of former members of the British Steel Pension Scheme have been left out of pocket thanks to bad advice to transfer.
While the legal teams supporting the former BSPS members are pushing for fair redress - a fight that has gone on far too long for far too many clients, the whole environment around safeguarding scheme members and protecting their pensions needs to change.
Indeed, the lifestyles and livelihoods of many former BSPS members have changed significantly as a result of taking advice to transfer out of the defined benefit pension scheme - and the change, as outlined in many FTAdviser reports - has not usually been for the better.
Henry Tapper, chief executive and founder of AgeWage, and founder of Pension PlayPen, talks to FTAdviser In Focus about what is now needed and what sort of lasting, positive changes should be put in place to make sure such a scandal never hits the UK again.
FTAdviser: Will every client who was wrongly advised to transfer out ever get the proper amount of redress?
Henry Tapper: Proper redress would be reinstatement into BSPS, which is now free of the PPF. It has also been mooted that a superfund could offer pensions to members on commercial terms but there is no sign of the FCA promoting any form of reinstatement.
The current hope for steelworkers is the FCA’s consultation on a BSPS specific redress scheme. But this scheme appears to be focussing on further redress from IFAs. How much more blood can be wrung out of that stone?
It’s important to point out that many steelworkers were fully aware of the risks they were taking and were well advised.
FTA: Have we learned the lessons taught to the industry by BSPS?
HT: We’ve learned some lessons, but I’m uncomfortable that government is planting the blame for the fiasco of the BSPS Time to Choose purely on rogue advisers. This ignores the serious failures of other parties – including the Trustees, to properly protect members.
In retrospect, the Regulatory Apportionment Agreement that required the BSPS to make choices was unnecessary. BSPS should have entered the PPF assessment in early 2017 which would have prevented the right to transfer.
Entering PPF assessment does not mean members get PPF benefits. Well managed schemes like BSPS can re-emerge from assessment and provide PPF+ benefits. This is in fact what has happened. BSPS entering PPF assessment should not have been presented as disastrous to member interests.
For rank-and-file members, the PPF did not represent a major cut in benefits. The worst cuts were for senior management. I have concern that it was those who had most to lose from the PPF, who set up the RAA.
TPR has a duty to protect the PFF from risky schemes and it required the trustees to de-risk in early 2017. The result of this was a change to discount rates which doubled transfer values. This created a double-whammy of irresistible CETVs available on a time-limited basis.
