News that Pension Insurance Corporation (PIC) has rescued those former members of the British Steel Pension Scheme who are currently in the PPF assessment period has been widely promoted by PIC’s financial PRs and got some favourable coverage in the Daily Mail
Indeed the internal mail sent to PIC staff jubilantly boasted
The Daily Mail had a particularly good quote: “An industry source said the deal would be ‘like Christmas’ for those who had been expecting to receive the PPF’s terms.”
But I’m not so sure that’s how all the 30,000 members of the Old British Steel Pension Scheme will see things. Back in 2017, ,these members were asked to choose between moving into the new BSPS and staying put, the default position was staying put, which meant that deferred members who did nothing risked getting a lower pension from the PPF. Most deferred members agreed to join the new scheme or simply didn’t make a choice and stayed where they were.
But some members took an active choice to see their pension going into the PPF – which is now not going to happen. So why would anyone want to take a benefit haircut of 10% or more? The answer can be found in a comment by Eugen Neagu on the Steelworkers own Facebook page
I re-read this. If I am right, this applies to the Old BSPS, not to the New BSPS. So it applies to the members who chose the PPF either who chose PPF, or by default (by not making any choice)? Am I wrong?
It is very possible that commutation coefficients and early reduction factors that PPF offered may not be available now, as PIC will use its shoddy commutation factors and early retirement coefficients!However, as it is a buy-in, this will mean more transfers would be allowed by Old BSPS.We certainly need more clarification at this moment.
Eugen is spot on, what we have is a press release from PIC, long on self-congratulation but short on detail. This is a deal that has been done behind closed doors with the “Open trustees” who now look after member interests.
Open Trustees Limited has been the Scheme’s Trustee since 29 March 2018. It is an independent entity but is wholly owned by international law firm, Osborne Clarke LLP. The Trustee was advised by Barnett Waddingham LLP and Hogan Lovells
Without impugning the integrity of any of these organisations, I doubt that any of them have set foot in Scunthorpe or Port Talbot and that the any of the 30,000 impacted members have a clue who has been negotiating on their behalf. I question how open “Open Trustees” have been or could be.
The deal may have been reported as a win-win for the PPF, trustees and for the members but the FT was more cautious
We are yet to be told exactly how many of BSPS’s 31,000 members will see an uplift in their benefits as a result of their scheme spending £2bn on an insurance deal, to lift them out of the lifeboat scheme.
— Josephine Cumbo (@JosephineCumbo) October 22, 2020
and Jo Cumbo clearly shares some of my scepticism
Indeed! Clarity is needed over the situation for people who went down PPF route for this reason.
— Josephine Cumbo (@JosephineCumbo) October 23, 2020
Deals like this are not done altruistically, there is money being made from this buy-out and it is being made for the shareholders of PIC.
The PPF is a not for profit organisation which has an outstanding reputation for service (congrats to COO Sara Protheroe for her OBE this month) and a reputation for getting investment decisions right , delivering value for money and meeting its financial targets.
Members who have taken a decision to be in the PPF (a small minority of the 30,000) should be allowed to choose to stay in the PPF, they should not be required to accept terms which they previously rejected or be subject to the rules and service of an insurer who they have no knowledge of.
If this doesn’t happen, they might reasonably ask, why were they asked to choose in the first place, a question many of us have been asking for a long time!