This tweet was put on social media by John Ralfe last night. More people read my blogs than read John’s tweets and there is a good argument for letting this idiocy lie.

However, it is important that little rumours are not allowed to spread. Here is the tweet.

can I repeat, IF TSUK went bust, BSPS2 would not have enough assets to stay out of the PPF. It is just a matter of fact.

— John Ralfe (@JohnRalfe1) November 1, 2017

I know people close to the deal that has been struck by Tata, they have no reason to be kind to Tata, BSPS2 or to the RAA agreement that allowed BSPS2 to happen. When John Ralfe uses the phrase “it is just a matter of fact”, be assured, he is at his most speculative.

The generally held view, among senior people I have spoken to is that it is not BSPS2 that Tata workers should be worried about, but their jobs.

Assuming that the mega-merger with ThyssenKrupp goes ahead – and there is no reason to suppose it wouldn’t, then Tata Steel looks a strong business. It will undoubtedly restructure and this will be unpleasant, but the memorandum of understanding that has been signed, should make BSPS members sleep easy – about the pension arrangements put in place.

Steelworkers have quite enough to worry about – without needless scaremongering about what might or might not happen in “the medium term”.

BSPS2 would enter the PPF if TSUK went into administration, which is entirely possible in medium term

— John Ralfe (@JohnRalfe1) November 1, 2017

A more dangerous scenario than to BSPS2 than the loss of the covenant is the loss of confidence in it, that is created by reports of its imminent demise. The scammers and low-life financial advisers who repeat that BSPS2 is just PPF deferred, could create such a loss of new members for BSPS2 that it becomes unviable to run. We are a long way from that point at the moment, but that could happen. It would mean that some of  the money that had been destined to back BSPS2 would be paid to the PPF and the rest of the £2bn buffer promised to BSPS2 members – would be lost to pensions.

This may be in the interests of jobs at Tata (or Tata ThyssenKrupp) but it is more likely to be a windfall for shareholders.

I do not know how John Ralfe can speculate that BPSP2 would be sunk by the loss of its sponsor, there are examples of schemes that have continued to trade sponsor less (Polestar and Trafalgar House). Whether the Pensions Regulator would allow this to happen is debatable but there is precedent.

But of much more importance is to look at the behaviour of Tata itself – in the past year. I can see no evidence that the Indian parent has done anything but stand behind BSPS, it has continued to fund it and has not walked away from its obligations but taken the extraordinary step of setting up BSPS2 to be self-sufficient.

Why would it go to such lengths if it did not want BSPS2 to succeed? Why would the impending merger with ThyssenKrupp be anything but good news for the BSPS2 covenant? And why is John Ralfe so keen to scare BSPS members either into transfer or the PPF?

I can find no answers to any of these questions. I can see no reason to be concerned about BSPS2, to any greater degree than any other scheme. Indeed, the high level of transfer requests already received by BSPS, has considerably de-risked BSPS2 since the buffer is not diminished by transfers into personal pensions (it is by transfers into the PPF).

It would be helpful if John would revert to his former position of encouraging people to consider their pension rights before transferring, and considering them in a sensible non-emotive way.

Chicken Licken was right to warn there was a risk of the sky falling on his head, he was wrong to suppose it was likely.

POSTSCRIPT

Since publishing this blog , I have received this mail from someone close to BSPS management. I quote it verbatim by way of balance.

As far as I understand it, the RAA was just about separating BSPS from Tata Steel UK. It was not about setting up a new scheme. Once the RAA was sorted out, the Trustee was able to look at setting up a new scheme. Initially, they were expecting the new scheme to have no sponsor, and were pleased when TSUK said they would sponsor the new scheme, and they got the equity stake. But the Trustee sees that sponsorship very much as back-up.

They don’t expect to need any more money from TSUK, as the new scheme will be well funded. This came up at the member meeting I was at in Corby on Tuesday– in response to the question ‘What happens to the new scheme if TSUK goes bust’, the panel replied that they would hope the new scheme could continue without a sponsor (like Kodak). This would of course need approval.

Chicken Licken was right to warn there was a risk of the sky falling on his head, he was wrong to suppose it was likely.