Time-bound decisions; the tough choices facing BSPS members

time to choose.png

Supporting the Steel Workers in their decision making

Over the weekend I was asked to join two important Facebook Groups, one is for those still working at Tata and the other for former employees, what links them is that both groups are for members of the British Steel Pension Scheme (BSPS).

I am  proud to be in these groups, it shows a trust which I will not betray by attributing any posts. It gives me a precious insight into how steel men and women are reacting to the choices being presented to them and is incredibly valuable in helping me guide First Actuarial in how we can help future memberships who will undoubtedly face the same issues.


Those choices

As with the Kodak membership, the position if BSPS members take no action is that they will see their membership exchanged for membership of the Pension Protection Fund. It’s estimated that for up to 90,000 of the 130,000 members, this will be a bad thing. But for a sizeable minority, the PPF will present a viable choice and for a few, a very obvious improvement to moving to a new scheme (let’s call it BSPS 2).

There is another choice, to take money away from BSPS using a cash equivalent transfer value. Though this is the most volatile option, it appears to be the most talked about in the two groups I have joined.


Help is at hand

The Trustees of BSPS have appointed two firms to run a helpline for members.  The Daily Telegraph report that

“While there is a helpline, phone handlers are not allowed to tell savers which option is better for them”

This is not the helpline’s fault. It can only offer guidance – advice is about giving a definitive course of action – telling people what to do. So the help at hand is limited.

The Pension Advisory Service (TPAS) find there is a brisk trade in calls from BSPS members seeking a second opinion. This is good, people need to make informed decisions. If I was taking a decision as important as this one, I would want all the information I could get.


But not all the data…

For reasons which aren’t clear, not all the people being asked to take decisions have all the data they need to take those decisions.

This is from the very clear website put up for members to refer to

Some members have no personal figures in their option pack

There are several reasons why this can happen. We might not have had all the information in electronic format. In other cases, we didn’t have all the information we needed to calculate figures in time for the option packs because members transferred in benefits from another scheme, or paid Additional Voluntary Contributions to add a period of service. We are working to make sure we have all this information available before the new scheme starts paying benefits and the current scheme moves into the Pension Protection Fund.

The key word here is “before”. Giving members information after deadlines have past is not helpful to the decision taken before the deadline.

The issue of time crops up again in the next section of the site.

We can’t send you any more figures

We won’t be sending you any more figures on top of what is in your option pack, because it’s not possible to do that in the time available. If you’re a non-pensioner and your option pack has no personal figures, you can find information about your deferred benefits in your latest deferred benefits statement. If you can’t find this statement, please phone the helpline and ask for a replacement.

We know that the lack of figures in your option pack could make it harder to choose your option, particularly if you are thinking about transferring your benefits to another pension arrangement. If you are thinking of doing that, you or your financial adviser can ask the helpline for a fact sheet that sets out in more detail how pension increases in the new scheme will be calculated. This will help your adviser carry out the analysis they need to advise you.

Infact this whole section of the site is called “Time to Choose“. BSPS members have a closing window of time to take decisions, a window shaped not by them but by the Trustees and Employer.


Some things change with time (including CETVs)

But always at my back I hear, time’s winged chariot hurrying near – Andrew Marvell.

I can quite understand why BSPS Trustees want to impose time deadlines, but I can also understand the worry of members who are having trouble getting information about their benefits in a timely fashion. Things are not helped by people realising that in the outside world , interest rates are going up and transfer values going down.

This snippet was being reported on the Facebook pages yesterday, it comes from the Sun and it’s all about time.BSPSsun

BSPS members, whether they’ve left Tata or are still working there, are entitled to a CETV – unless they are actually drawing a pension. News that the CETV may fall in time is clearly a worry. It would be very helpful for members considering a transfer out of BSPS to be given assurances. I can confirm that CETVs are guaranteed for a three months period after issue. This conveniently takes members to the end of the decision making process. So members do not need to panic.

Having said that, one thing that was clear, is that a CETV from BSPS1 is likely to be higher in value than from BSPS2 (which has an inferior) benefit basis. You cannot take a CETV from the PPF so if you are going to transfer, you are best to do it in the pre-December window. Time is critical to the decision.


Some things do not change

People’s need for a wage in retirement after they have hung up their boots does not change, just because they have the freedom to do what they like with their pension.

BSPS is one of the oldest and best run pensions not just in Britain, but in the world. For all the discontent about having to take these decisions (which I totally understand), knee-jerk reactions against either BSPS or the PPF are unlikely to make for good decisions,

One thing that worries me  when I spend time on the Facebook pages, is the level of frustration shown at the process.

It is understandable frustration, but it worries me that some members seem to think it is worth transferring at any cost. As Angie Brooks points out on these sites, this attitude is precisely what scammers hope for. They will be more than happy to liberate pensions on the basis of ignorance. I urge all those considering moving their pension to speak to TPAS but also to read Angie’s excellent advice to deferred members of BSPS.

I am afraid that the presence of fraudsters is another thing that doesn’t change.


Our thoughts are with the 130,000.

I was in the fortunate situation of choosing to be a pensioner of a strong DB scheme. Not only did I make the choice not to take my CETV but I actually chose pension above cash.

I did so because I know I am likely to live a long time and will need to support dependants for much of that time. Nonetheless , the decision about what to do was tough.

The decision facing the 130,000 members of the scheme , including those who are drawing pensions, is tough. Doing nothing may prove a bad option, doing something may prove disastrous (if it leads to a scam). Most options in the middle should be reasonably easy to understand – provided the information is presented well. But as we have read, not all the information is at hand.

Understanding the options is one thing, knowing what to do is another and I totally sympathise with the people on the Facebook page who ask for such advice.

These decisions were never “in plan”. Those who set up BSPS did not expect the scheme to be a source of trouble. They saw it as a means for steel people to retire without trouble.

If we are serious about restoring confidence in pensions, we should be supporting the steel-workers over the next three months , in legal ways.

That means acting responsibly but helpfully. Which may mean doing no more than I can do on this blog.

What I can do is to promise what help I can give – if asked.

 

 

From the BSPS site

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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4 Responses to Time-bound decisions; the tough choices facing BSPS members

  1. John Mather says:

    The FT today reports on the Global Pensions Index it is not confidence building. Is it not time to recognise that a DB is not a guaranteed pension but an aspiration based fund subject to the lower life expectation of the entity making the “promise” and the increasing longevity of the member. Is it not true that too little weight is given to the mortality of the sponsoring company. This could be said to be misselling, but then they are not sold are they. So who is responsible for not adjusting assumptions to reflect the trends of diverging mortality.

    Liked by 1 person

  2. henry tapper says:

    technically the trustees and in practice the actuaries – John. There are a lot of other questions that we could be asking about the long-term viability of DB schemes, but there is not time for that in this case. The pensioners need to take decisions in short time-frames.

    Liked by 1 person

  3. Many thanks, Henry for your kind thoughts and expertise at this difficult time in our members lives. Many are bewildered by what they are been asked to decide and confused by the Time To Choose information packs. We have linked to several articles by yourself and Angie.

    Stefan (BSPS Members Group)

    Liked by 1 person

  4. henry tapper says:

    There is a lot of goodwill and support for you Stefan and – though we’re constrained by not having a formal role, people like Angie and I are on hand to support the brilliant work of TPAs and others.

    Liked by 1 person

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