Independent review recommends changes following BSPS scandal

An independent review of communications and support given to British Steel Pension Scheme (BSPS) members has detailed a series of recommendations to improve the pension restructuring process in the future.

The report, conducted by former Money Advice Service CEO Caroline Rookes at the request of The Pensions Regulator (TPR), stated that “the mere fact of giving so many members a choice led to a very complex and for some overwhelming situation which caused stress and uncertainty as well as potential financial loss".

It also said that “the lack of sufficient supporting information and guidance exacerbated the problems”.

In light of this, Rookes wrote in her report that “the way to avoid or minimise this in future would be to make changes in legislation which could help to prevent the complexity by taking the choice away”.

Specifically, Rookes recommended that TPR and the Department for Work and Pensions (DWP) discuss whether allowing a partial default into a new scheme or setting requirements for a new scheme to be distinguishable from the Pension Protection Fund (PPF) would simplify the restructuring choices.

Additionally, she suggested that TPR and the Financial Conduct Authority (FCA) “explore the possibility” of granting a new power for TPR to consider the preparedness of a scheme to handle the member consultation exercise in the event of a regulated apportionment arrangement (RAA) and, if necessary, “seek to delay or stop the post-RAA member consultation”.

Rookes also highlighted the need for public bodies, such as TPR and the FCA, to intervene earlier and communicate better amongst themselves and with schemes to help minimise risk and avoid a repeat of the BSPS scandal.

The review stated that trustees are the “front line in protecting member interests” but that “TPR could do more to point trustees in the right direction”.

It recommended that TPR and other public bodies should develop a guide for trustees on planning and managing restructurings and major changes.

To improve communication with members, Rookes said that TPR, the FCA, the PPF and the newly formed Single Financial Guidance Body (SFGB) should ensure the messages conveyed on their websites should be consistent with one another.

Furthermore, she suggested that the SFGB and TPR should “lead a piece of work to map out the processes around pension scheme restructuring”, while TPR should “lead work to produce communication materials, drawing on expertise from the SFGB”.

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