This is a message to British Steel Pensioners who may be feeling uncertain about the British Steel Pension Scheme. The message is simple, you have two secure options, the BSPS2 and the PPF, for most of you BSPS2 will be the right option. Though there is short term uncertainty because of the choice you have, you continue to have long-term security – whatever happens
Hugh Smart is the CIO of BSPS, he runs an in-house team of experts who are wold-renowned for managing the assets of the Steel Pension Scheme to pay the pensions of 130,000 steel workers. The skill of him and has team has made sure that even against the most rigorous standards of reporting, the Scheme has remained solvent.
Hugh will continue to manage the assets backing most of the 90,000 pensioners who should transfer to BSPS2 rather than the PPF. He will also manage the assets backing future pensions payable to younger members who choose to move to BSPS2 rather than to the PPF or to take a transfer value.
Of course, the assets that are transferred out of BSPS to investments managed by insurance companies and SIPP managers will not be managed by Hugh, but by other investment experts. From the small amount of correspondence I have had with Hugh he seems stoical and resigned to losing members exercising their pension freedoms.
He recognises that BSPS2 will manage a fund through to the payment of the last payment of the last pensioner, this will undoubtedly post-date his retirement and maybe the retirements of his successors. But I am absolutely sure that he and his successors will continue to work for BSPS2 members as diligently as he has worked for members in the past.
It will be a tough and unglamorous job, he will be called a Zombie manager of a Zombie fund. There will be those who think him a failure (for no good reason). That is why I use the word stoical. Hugh should know that I do not think him or his team failures, I expect them to be heroes
For while BPSP2 pensioners will not have the certainty of a cash transfer, they will have the security of the services of Hugh and his team of staff and advisers. I do not think that this security has been fully explained.
Certainty and security
The choices offered to the members of BSPS create insecurity. It is not just the 43,000 who have the option to transfer who are taking choices. The 90,000 older people also have a choice – though it is easier for them. Unlike their younger colleagues they do not have the certainty of a transfer value (though we had enquiries about transfers from pensioners when we saw in Wales). The choice is the security of BSPS2 or the security of the PPF.
The security of a wage for life that has been enjoyed by BSPS pensioners is now being shaken by unnecessary speculation about the viability of BSPS2. This cannot be good for pensioners and I hope that BSPS pensioners who read my opening paragraphs will take comfort from knowing that there are people within the BSPS management team who will continue to exercise their skill and judgement on their behalf.
Those advisers who imply that BSPS2 is unviable do so with little understanding of the facts. There is a financial buffer – expected to be £2bn with which BSPS2 will be protected from going bust. On top of that, its liabilities are likely to be much reduced by people taking cash transfers. Taking these cash transfers will reduce the risks of BSPS2 but will not reduce the buffer.
BSPS2 has every chance to prosper. It should be self-sufficient and not need further support from Tata. Even if Tata went bust, BSPS2 has a good chance of surviving. If – in the worst case – Tata went bust and BSPS2 was insolvent (under PPF rules) , pensioners would get the PPF benefits. These benefits offer a high degree of security.
The security of BSPS2 for pensioners who choose it (over the default option of the PPF) is increased because of the numbers of younger members transferring out. Since I am not advising for and against a regulated product, I will be blunt.
BSPS pensioners have little to worry about by moving to BSPS2. The small minority of pensioners who might still benefit from Clause 11 (and might benefit from the PPF) know who they are and are getting special help.
The message to the generality of BSPS pensioners is simple, stay calm and join BSPS2.
The certainty of cash – is not the same as security.
I notice that the financial advisers and lead generators who have been coming from all parts of the country to the valleys, are showing no interest in those who are in receipt of pensions and you don’t need to be cynical to understand why. However, what is being said to the younger generations of members is creating insecurity among the pensioners and this is not good.
While the certainty of the cash equivalent transfer values is valued , there is insecurity among many of the deferred pensioners as to whether the financial advisers who they are putting their trust in, have either the competence or the integrity that steel workers have enjoyed these past sixty years.
Some people , on reading this, will suppose I am arguing that younger steelworkers reject the CETV. I am not saying this, I am saying that the certainty of the CETV needs to be backed up by the security that comes from sound financial management. My reason for being involved is not to influence people’s choices, but to make sure that people know what they are doing, and- if they do hand their money to someone other than Hugh- that that person has the same standards as Hugh has.
In the meantime, I would like to assure BSPS pension members that they have been and will continue to enjoy the highest standards of skill and care, from BSPS2. BSPS2 trustees have sound advisers and you have a sound helpline and the services of TPAS. You should use both to understand the high level of security you will enjoy in BSPS and – if you choose it – the PPF (which is also very well managed)
I have been recommending advisers in the Port Talbot area and up north and I have also been recommending people look at e-advisers where they feel comfortable to take advice without physically meeting advisers. I will continue to put good advisers in touch with members who ask for help. So will Al.
I can be contacted on email@example.com
Al can be contacted on firstname.lastname@example.org
A bit of philosophy (indulge me it’s my birthday)
Certainty is generally false , security comes from within and cannot be sold you.
The security that BSPS members enjoy, will not be lost in BSPS2 – or yet the PPF.
After a lifetime’s work, BSPS pensioners should be allowed to dream a little!
When I looked at the hills behind Port Talbot, I knew what the painter meant!