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Steel pensions: Stephen Kinnock calls for flexibility

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The UK government must take action to stop thousands of steelworkers being transferred into a pension scheme that offers them fewer benefits, says an MP. Friday is the deadline over whether or not to join a new pension scheme. Aberavon MP Stephen Kinnock wants ministers to give pension trustees the flexibility to deal with an estimated 20,000 members who are unlikely to respond in time.The Department of Work and Pensions is to consider Mr Kinnock’s letter.At the moment, British Steel Pension Scheme (BSPS) members will automatically go into the Pension Protection Fund (PPF) if they do not ask to move.The PPF is the safety net where pension schemes go if they are at risk of collapse.BSPS says it will accept any documents posted on deadline day.Tata Steel UK has offered to pay £550m into the now-closed pension scheme and give the fund a 33% stake in its UK business, but it will no longer have any responsibility for the pension scheme.In most cases, the new Tata-backed scheme offers better benefits.About 8,000 people are employed by the company across England and Wales, including 3,500 in Port Talbot.Of the 122,000 pension scheme members, the BSPS expects 20,000 to not respond by Friday’s deadline and they will automatically go into the PPF.
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The BSPS says that the deadline cannot be extended because it would cost the pension scheme £200m if the transfers were not completed by the end of January.Workers also have the option of transferring out into a personal pension scheme.

122,000 members

20,000 expected not to respond

18,000 pensioners over age of 85

1,780 leaving, have already left or transferred out

£760m taken out of the scheme

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The scheme’s retired members include 18,000 members who are over 85 years old.Glenys John, 95, is the widow of a steelworker. She was going to continue using the PPF, but after taking advice, has switched to the new scheme. But she struggled with the choice. “It is difficult, very difficult,” she said. “A lot of things are involved in it. Things I don’t understand.”Concerns about tight timescales and poor financial advice had led Mr Kinnock to call for more time.He is now “deeply concerned” that thousands are expected not to respond before the deadline and these will be defaulted into the PPF.Mr Kinnock, who is writing to the Department of Work and Pensions (DWP), wants a change in the rules, so those who have not responded will go into whatever scheme the trustees judge is best.”All the evidence suggests that for the vast majority of members, the British Steel pension scheme mark two would be a better deal for them and I’m very concerned we could have thousands not being put into the best possible deal,” he said.The DWP said it would respond after considering Mr Kinnock’s letter.
Source: BBC