The Pensions Ombudsman rejection of complaints against the trustees of the British Steel Defined Benefit Pension Scheme has led MPs in the South Wales to explore legal action to quash the findings of the Pensions Ombudsman.
“After extensive investigation, the Ombudsman has not upheld these complaints. We appreciate that members will be disappointed with this outcome”
The British Steel Defined Benefit Pension Scheme had approximately 124,000 members with £13.3 billion of assets and liabilities of around £14 billion. Tata Steel UK, the owners of British Steel announced in 2017 the restructuring of its pension scheme to keep its UK loss-making operations afloat. Tata had lost £2 billion in five years. Regulators accepted that Tata Steel UK would be insolvent if it continued with the pension scheme.
In 2018 the Work and Pensions Select Committee said the government, Tata and regulators failed to protect 124,000 members from a “major mis-selling scandal”.
Tata and the trustees offered its members three options to move their pensions to new schemes. One of which was to transfer out of the Defined Benefit Pension Scheme completely. This led to many “Financial Advisers” targeting scheme members with bad advice to transfer out of the scheme.
These so called “Financial Advisers” would advise the steel workers to transfer out of the scheme, even through it meant they would be financial worse off in retirement. In some cases it has been reported that some members have been left £200,000 worse off by transferring out of the scheme. Many of the “Financial Advisers” have now closed down and shut up shop.
Pensions Ombudsman Complaint & Mis-selling
Due to many steel workers being left out of pocket from bad advice and the handling of their defined benefit pension transfers, many have sort compensation and have lodged complaints against the pension trusties with the Pensions Ombudsman.
It has been alleged thousands of steel workers didn’t receive all the information necessary to make an informed decision about their pensions.
It seems that the British Steel Pension Mis-selling fiasco is likely to continue rumbling on for some time.
Defined Benefit Pension Transfer Advice
The British Steel Pension Mis-selling fiasco should be a lesson to anyone looking to transfer their Defined Benefit Pension. In most cases it is not advisable to transfer out of a Defined Benefit Pension.
This is because Defined Benefit Pensions offers risk free benefits that shouldn’t be given up. It is only in exceptional cases that transferring out of a Defined Benefit Pension will be suitable for someone. The FCA has very strict rules and regulations that need to be adhered to.
If you are looking to transferring your pension, Grove Pension Solutions offers specialist Defined Benefit Pension Transfer Advice.