Stefan, Henry and Rich go to Parliament.

dwp select

Stefan Zait, Rich Caddy and I  have been invited to go to Westminster and give oral evidence to the DWP Select Committee about the support given to BSPS members in their Time to Choose

Al Rush will inform us with the IFA’s perspective, I’ll talk about the scheme and Stefan and Rich will talk for the members. Stefan and Rich pretend  not to be important but they set up the Facebook Groups and has got thousands of Steelworkers comfortable with their decision. Stefan and Rich are our bosses.

We are now less than a fortnight away from the end of the Time to Choose (a few people with bridging pensions get another few days). People who are looking to transfer don’t have to get their forms back to BSPS till the last week in March (the cut-out’s 28th but BSPS are suggesting 22nd to be safe). Our session is on 13th so it still has relevance to BSPS members. But I suspect Frank Field & Co will be looking to the future.

My and Al’s written evidence is on the site, Stef’s evidence is splattered all over Facebook (Perhaps the Select Committee could be individually invited as observers to read what’s said).

Ifyou want to read what I’ve said to the MPs , I’ve posted it here (with permission!).

Al and Jo Cumbo are down in Port Talbot today (details on Facebook pages). I’m slobbing it in London, Stefan’s doing some proper work in Teeside! I’ll publish Al’s submission separately.

Henry Tapper’s submission to the Work and Pensions Committee on the risks surrounding cash equivalent (CE) transfers out of DB pensions


I am a Director of First Actuarial and Founder of, I blog at I was a self-employed IFA for 12 years (1984-1995) and have since worked for insurers and latterly an actuarial consultancy.

During the spring of 2017, I wrote a series of articles on the difficult choices ahead for members of DB plans. As the situation at Tata developed I focussed on the choices of those in the British Steel Pension Scheme (BSPS). This brought me to the attention of the scheme and I and some colleagues at First Actuarial were asked to present ideas on how members could take informed decisions that delivered the best outcomes for them.

Essentially, we proposed to the trustees a helpline that focussed on member’s choices and – in particular – the issues surrounding CE Transfers. We proposed inter-alia, establishing a network of trusted IFAs prepared to act on a consistent pricing structure and to a consistent standard. The choices are outlined in this picture and are familiar to most BSPS members

First Actuarial’s proposals were not taken up but I continued to feed ideas my self-published articles.

These articles were picked up by Rich Caddy and Stefan Zait who had established Facebook pages or BSPS members which directed them to helpful information. I was invited to post my articles to these pages and did so. Al Rush also joined the group, Al and I have worked together in a project to up the standard of IFA advice on transfers.

In our time on the Facebook pages, Al and I found many misconceptions among members about the transfer process and the risks of transferring. After a few weeks Al suggested we approach Rich and Stefan, who subsequently arranged for us to visit Port Talbot and spend time with members in the local rugby club.

In our time with members, we heard first-hand what we had read on the Facebook pages. I have listed below the concerns we took away from these meetings along with remedies that we have considered. Al is a regulated IFA who is authorised to conduct transfer business. In the majority of cases I have witnessed Al tell BSPS members that transferring is not for them.

We have also spoken with a number of local IFAs who have also taken this position. We would be happy to put them in touch with the Committee. I understand Al is writing to you separately Al and I took holiday to go to Port Talbot and have been spending time on Facebook in non-company time; this submission is from Henry Tapper – not First Actuarial.

Issue Narrative Our Proposed Remedy
Holistic advice Options to transfer to BSPS2 or default into PPF not discussed Ban on contingent charging; advice paid for or subsidised by Trustee or Sponsor
Whole of market solutions Workplace pensions were not discussed as a destination for transferring cash Ban on contingent charging; better disclosure from workplace pension providers.
Weak fee disclosure Members did not understand the financial cost or the impact of IFA charges The cost of the initial advice should have been fully disclosed in monetary amounts, even if the fee was subsidised by a third party.


No statement of value for the money Members did not generally get a schedule of services included in price A clear statement of what was provided within the upfront and ongoing cost
Inappropriate products Many of the investment solutions proposed were inappropriate for drawdown Greater controls not just from advisers but from SIPP managers.
Unrealistic expectations Many members expected guaranteed returns on investments exceeding critical yield A thematic review from the FCA of the solutions proposed.
No cashflow modelling Most members had not discussed with advisers their future needs FCA’s proposal that cashflow modelling be compulsory and evidenced – be adopted
Bulking of TVAS Lead generators orchestrated a commoditised TVAS service for advisers The adviser doing the analysis must make the recommendation.

poll bsps

Summary of findings and remedies proposed

We have found evidence of a breakdown in orderly advice in Port Talbot, we have anecdotal evidence that matters are little better in other towns where BSPS members. A poll on the Facebook page suggested that take up of transfers will be high.


Our evidence confirms that four in five members we spoke to intended to have their transfer pot managed by an IFA and had an expectation of better outcomes than those provided by BSPS2 or PPF.

We saw little evidence for this confidence. Once IFA and product charges had been deducted from the assumed return on investments, we doubt that even where returns were regular, comparable levels of income to BSPS2 or PPF would be sustainable – certainly in the recommendations we were shown.

The average CETV we saw was £350,000, the lowest £80,000, we saw one CETV at c£700,000. The average upfront fee quoted was 2% of the CETV, we saw no tiered fee-scales – when we asked one member why the IFA charged 2%, we were told the IFA said this was the recommended level.

What we saw was not illegal and we did not see the comment above in writing. What we saw could be considered bad practice.

Much of what we saw could have been avoided if

  • A panel of IFAs had been established in Port Talbot (and in other steel towns) with sufficient capacity in place to meet needs.
  • A code of conduct could have been agreed between the IFAs and shared with members (this was in our proposal)
  • Contingent pricing had been banned (with the code) and members investigating transfers had been asked for a small upfront fee (the balance being subsidised or paid for in total by the Trustees)
  • Where transfers proceeded, they had met the standards proposed in FCA16/17.We understand that the FCA have now visited Port Talbot and have spoken to many IFAs. The lead generators who bulked transfers were able to avoid the FCA, despite their active participation in the getting of TVAS on a bulk basis. Permissions to apply for a transfer value were often obtained in return for little more than the supply of a “chicken in a basket supper” in a local pub.I appreciate that the Trustees have taken steps to help members take informed choices but these have proved inadequate. It is good to see the setting up of dedicated helpline by TPAS, but their remains an advice and guidance gap.   


I hope that in future cases where members are asked to take choices as tough as those in “time to choose”, lessons are learned and members are not abandoned to the market as outline above.

In my view, much of the trouble at Port Talbot could have been avoided if the Trustees had been more proactive – taken up recommendations made in the summer and focussed more on member needs.

The open period for transfers is far from over, though decisions on the “Time to Choose” choices need to be made by December 11th, we understand these can be over-ridden by an election to transfer from BSPS received by the trustees as late as March 28th. This being the case, we might not see the execution of members instructions to transfer until the early summer.

Appendix – our brief

Tom 2


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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4 Responses to Stefan, Henry and Rich go to Parliament.

  1. Stefan says:

    Serious, frightening, distressing and could have been handled far better for the members involved. There are immediate issues the agencies need to address but lessons must also be learnt regarding management of DB transfers from large schemes.

    Boss? Gave me a laugh. I bow to your expertise and enthusiasm. I hope that the group creator and real Top Man Rich Caddy will be able to make the journey from the cold north with me.

  2. henry tapper says:

    I hope so too!

  3. Sue Jones says:

    Well done for getting this topic the attention it deserves. I have spoken to many fellow members of BSPS and although their circumstances differ they speak with one voice to say that this is a position they never would have anticipated being in. The effects of this exercise will be felt for years to come and I hold Tata entirely responsible for putting us through this stress and anxiety.

  4. It would be interesting to know what multiple of the current (uplifted to date) benefit (not the pension projected at retirement age) the latest CETVs amount to. I could then run it through Fowler Drew’s stylised version of our stochastic drawdown model to estimate roughly how hard a target the projected benefit in each case (PPF or new scheme) is to beat and the minimum level of risk taking necessary to beat it with a high degree of confidence. I would be very surprised, the scheme having plugged any shortfall and derisked, if this was not a an easy decision in terms of probable sustainable real income. The only reason then for erring on the side of caution is lack of experience of market volatility – which may apply to many members but you shouldn’t assume it. I would recommend this sort of calculation as a valuable form of free triage to test for a prima facie case for transfer that can then be dealt with thoroughly and at an appropriate fee.
    A triage calculator would also go a long way towards weakening the bias to transfer that Henry is so concerned about and wants to share with the Committee. Interacting with technology is probably the best way to minimise commercial biases and generate trust.
    It is perhaps also a striking comment on the industry that scheme members will only rarely encounter stochastic modelling of drawdown that, using probabilities, can clearly quantify and explain the trade offs between whole-plan outcomes and short-term volatility, and the dependence of each element of the trade off on the approach to risk.
    Which raises the question: what sort of IFAs would the Trustees have selected as a panel (had they domne so) and on what basis? Business integrity is important but what about technical integrity in an area where existing processes are clearly not up to the task?

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