Steel pensions scheme victim to 'major mis-selling scandal' - BBC News
Government, regulators and "financial vultures" are criticised by an MPs' report into steel pensions.
British Steel pension scheme members were targeted by "vulture" financial advisers after Tata was allowed to offload its retirement fund, MPs say.

In 2017 the Indian firm announced a restructuring of the £14bn fund to keep its UK loss-making operations afloat.

But the government, Tata and regulators failed to protect 124,000 members from a "major mis-selling scandal", the Work and Pensions Select Committee said.

The UK government has yet to issue its response to the "neglect" claim.

The Pensions Regulator said it would continue to work to protect savers.

The report from the Work and Pensions Select Committee was looking at the closure of the British Steel Pension Scheme (BSPS).

Regulators had accepted that Tata Steel UK would be insolvent if it continued to sponsor the scheme.

About 8,000 people are employed by Tata across England and Wales, including 3,500 in Port Talbot, but those figures were dwarfed by number of retired steelworkers - more than 100,000 - who were members of the scheme.

Those members had to decide what to do with their pension funds after the scheme was separated from Tata last September.

Between October and December 2017, they had a choice of entering into a new Tata-backed scheme, BSPS2, or the Pension Protection Fund (PPF).

Both were less generous than the scheme that closed but BSPS2 was better for the majority of people than the PPF.

This video can not be played To play this video you need to enable JavaScript in your browser. Frank Field MP: "Pension holders were fleeced by financial vultures"

A third option was transferring out of the scheme completely - a so-called DB transfer - but the committee said this is "not usually in someone's interests".

But circumstances surrounding the BSPS "created perfect conditions for vultures to take advantage", the MPs concluded.

One Tata worker told the BBC he lost almost £200,000 by transferring out of the BSPS after seeking independent financial advice.

Last week, the scheme's trustees said that, since March 2017, it has processed 2,600 pension DB transfers with a total value of £1.1bn. The average amount transferred out was £400,000 and in around 20 cases the transfer value exceeded £1 million.

This video can not be played To play this video you need to enable JavaScript in your browser. Retired Port Talbot steelworker Tony Taylor said a minority of pensioners have been taken advantage of

The committee noted that an outline plan to save Tata Steel UK, the "sponsor" of the BSPS, had been in place since May 2017.

But it said those signatories to the deal - Tata, the UK government and Pensions Regulator - had neglected the pension scheme's members.

Committee chairman Frank Field said: "Once again we find the pensions regulator fiddling while Rome burns, when it should have seen this rip-off coming."

He added: "All the responsible authorities must act, now, to stop more people being cheated."

Richard Bevan is one of the Tata workers who fears he has been targeted by "financial vultures"

The financial advisers' regulator, the Financial Conduct Authority (FCA), also faces serious criticism for how it handled concerns over mis-selling.

Other criticisms in the report were:

The pensions deal followed a year of crisis in the steel industry in the UK, with threats to jobs and falling prices

The FCA said it was reviewing the rules that apply to firms advising on pension transfers.

"We believe the committee's recommendations are sensible," said a spokeswoman. "We are currently looking at the register to see how we can make it easier to use."

It said it remained focused on ensuring consumers are protected.

The Pensions Regulator said it had fulfilled its primary role by evaluating and approving this complex restructuring of the scheme.

"We believe this was the best possible outcome for everyone involved in what was a very challenging situation, bringing greater certainty for thousands of scheme members," said a spokesman.

"We also helped tackle unscrupulous financial advisers who were exploiting the situation and the current high transfer values available by working closely with the scheme trustees, the FCA and The Pensions Advisory Service (TPAS)."

Tata Steel said the consultation process was a major undertaking involving "complex financial detail".

A spokesman said it was pleased so many pension scheme members made a positive choice to select the best scheme for their future.

"We were also pleased to note the trustee expects the new scheme to pass the agreed qualifying conditions to go forward," he said.

The BSPS trustee welcomed the work being done to ensure that members taking transfers from defined benefit pension schemes "do so on the basis of suitable advice".

He added that the actions of some financial advisors during the process was "something that the committee rightly highlights as a concern for all involved".

A spokesman for the steel unions, including Community, said: "There is clear evidence from this report that some steelworkers were exploited and given poor advice on hugely important choices.

"Regulators need to toughen up when it comes to shutting down irresponsible financial advisers, and warning people about which firms to avoid."

He said they would continue to support members who believe they have been ripped off "and will keep lobbying government and regulators to ensure measures are put in place so that such a scandal can never again be allowed to happen."