Financial bodies respond to BSPS review

The Pensions Regulator (TPR), the Financial Conduct Authority (FCA) and the Single Financial Guidance Body (SFGB) have “welcomed” the independent review by Caroline Rookes into the British Steel Pension Scheme (BSPS) scandal.

Rookes was investigating whether members of the scheme were sufficiently communicated with and supported by trustees and public bodies during the scheme’s “restructuring exercise” in 2017-18.

In her review, published today (22 January), Rookes suggested a series of changes that could be made to ensure that pension restructuring is clearer and simpler in the future.

In response, TPR chief executive, Lesley Titcomb said: “We welcome the report which acknowledges the good outcome secured for members through an innovative restructure of the pension scheme which we approved.

“By working closely with the FCA, TPAS and now the SFGB, we are determined to help minimise a repeat of the difficult circumstances in which some members of the British Steel Pension Scheme have found themselves.”

Despite the positivity from the public bodies, Royal London director of policy, Steve Webb, was not convinced they and the trustees had achieved the best outcome for BSPS members, saying: “The trustees of the pension scheme failed to make sure that workers had access to high quality impartial advice when making decisions about their pensions and regulators were slow to act when it became clear that things were going wrong.

“Workers had a right to expect that people who understand the complexities of pensions would have used their expertise to help them make the right decisions, yet those who were in a position to act let them down.”

Aegon pensions director, Steven Cameron, echoed Webb’s sentiment, but highlighted that there were lessons to learn: “It’s clear that some members of the BSPS have suffered as a result of inadequate communications, rushed timescales or unsuitable advice, but it’s important to look at the issues in context to make sure industry, regulators and trustees learn how to protect members involved in future pension scheme restructures."

Cameron also voiced his support for the recommended changes outlined in the report, commenting: “No two restructures will be the same, but we support recommendations to assess if the scheme is ‘ready’ to handle member engagement activity and to provide more guidance to trustees on their role and where to seek advice.

“We support TPR working with industry to produce a standard guide which should be available not just to trustees and the SFGB, but for advisers to use if they wish as a form of pre-advice source of information.

“Importantly, this mustn’t focus solely on the risks of transferring, but should also explain the potential benefits.

“This should cover information on guarantees given up on transfer, risks of investing for yourself and of running out of money, but also the increased income flexibility after transferring and the different treatment on death. While it may be in most people’s interest to remain in the DB scheme, the FCA recognises that transferring is the right thing for some people.”

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