What Al Rush and I are up to
I’ll be taking up to a week off over the next fortnight – partly because I have to and partly because I relish the opportunity of scooting around the country doing what I can to put British Steel Pension Scheme (BSPS) members in touch with good advisers.
Of course this is subject to demand and as yet we haven’t seen much demand for the sessions that Al Rush and I have promised the steelworkers of Port Talbot, we’ll know by Monday whether we’ll need to use the facilities of the Taibach Rugby Football Club or whether we can manage the enquiries over the phone or using the web.
If you are a steelworker with BSPS benefits, you can sign up for a session on Wed/Thurs 8/9 here. Further sessions are planned for Scunthorpe and Redcar. Please do not sign up if you are not a BSPS member.
Thanks to the advisers who’ve been in touch over the week offering your services, I will be spending the weekend with Al , working out who to promote and how to promote your services.
To be clear, we are looking for pension advice on BSPS benefits as well as execution. I have been accused of a bias against transfer execution, partly because I chose not to execute myself. I do subscribe to Mr Cunningham’s view, that you have to feel you have a special need to transfer, but I do not suggest that anybody should be excluded from transferring (who has that right), As my colleague Peter Shellswell told me yesterday “we are all special”.
Nor do I fully subscribe to the view of my friend John who sent me a link to the FCA’s guidance on transfer redress (FG 17/9) with a note
Who in their right mind would take on the commercial risk in exchange for a trivial fee
The FCA are fairly brutal in their assumptions, for instance redress will mean an adviser will only be able to write off the first 0.75% of any charges taken since receipt of money (effectively rendering themselves underwriting the charge cap). The actuarial factors involved within the paper look firmly set on the side of the person getting redress. As the FCA says
The basic objective of redress is to put the customer, so far as possible, into the position they would have been in if the non-compliant or unsuitable advice had not been given or the breach had not occurred.”….
The redress calculations, detailed in the document, should reflect the features of the customer’s original DB pension scheme … this would include, for example, different tranches of pension increase rates and deferred revaluation rates.
Peter Shellswell know only too well how onerous a task it is to calculate this redress, how expensive the redress becomes and on whom the burden of redress falls.
Those who enter into advising on DB transfers and executing transfers need not be out of their right minds, but they need to properly understand that execution carries risk. We would not want to jeopardise any adviser’s livelihood by promoting them where we did not feel they were competent.
BSPS have produced a technical note for advisers which can be found here. It has a lot of useful guidance on how to think about BSPS2 as an option.
Despite some recent relaxation in the original tPR stance (which was fundamentally anti-transfer) both the FCA and tPR start from a default position which is that members are better staying in a defined benefit scheme.
Clearly members of BSPS are in a special position. BSPS2 is not as generous as the Scheme they are currently in , nor is the PPF. There are concerns about the future solvency of BSPS2 , especially where the covenant of the sponsor is seen to be weak.
There are concerns that once a member is in the PPF , he or she loses the right to a transfer value and further concerns that transfer values from BSPS 2 are likely to be lower than BSPS. There are even concerns that the recent fall in interest rates will reduce CETVs between now and the end of Time to Choose.
There are counter arguments to all these concerns. If members go to the two BSPS group sites on Facebook – entry heavily moderated- they can see the conversations between other members. The arguments are extremely well laid out on the Time to Choose website and their is an excellent FAQ Facebook page for general use , which can be found here.
Detailed information on the BSPS scheme can be found here and specific help on the choice itself is martialled on the Time to Choose website , set up for members in the period of choice – till 11th December.
In addition, TPAS have put up some very useful information on its website, which is free for BSPS members to use and can be found here.
As part of all this, I’m turning over the Pension Play Pen lunch on Monday, to a discussion of the choices facing steelworkers, people who turn up to the Counting House on Monday will be able to put themselves in the position of steelworkers and find our for themselves how tough those choices can be (details here).
There should be considerable public concern that the outcome of the current decision making is a good outcome – e.g. it delivers to the reasonable expectations of BSPS members.
I don’t think that most members can fully understand their choices without financial advice and I am not competent to give that advice myself. However, along with my colleague Al Rush, I think we can help people to understand what good advice looks like and help people get value for money for the advice they pay for.
I hope that as a result of a few days fun work, we will see a few more messages like this
Hello Henry, I am one half of the lovely couple from scunny Al Rush referred to. I met al thru an online bike forum and have had two meetings with him to discuss my options. I feel that I have found an excellent IFA.I have followed your comments regarding BSPS and would like to thank you for your input. It’s a minefield for us steelworkers with no knowledge of finance. I shall be at your meeting in scunthorpe.Cheers
To sum up
- We am not anti financial advisers ,we are pro good advisers
- We are not anti transfers ,we are pro well-informed transfers
- We are not anti Tata, BSPS, BSPS trustees
- We are pro the restoration of confidence in pensions