In 2016, Tata Steel threatened to shut its UK steel business. In January 2017, closure was averted when a deal was struck, on condition Tata could offload its £15 billion pension scheme [BSPS]. The BSPS is a defined benefits pension scheme with 130,000 members, of which 40,000 are working, contributing and have not yet taken their pension benefits.

A deadline of 11 December 2017 was set for employees to decide what they wished to do with their accumulated pension pots. Their options were to move into the new British Steel Pension Scheme (BSPS2); the Payment Protection Fund (PPF) or transfer out to a private pension policy.

Defined Benefits pension schemes provide underlying guarantees. Options 1 and 2 above have less generous benefits than the original scheme. Option 3 has no guarantees and the value of the pension pot at retirement will depend entirely on the investment performance of the assets in the fund.

With a huge uptick in steelworkers taking their transfer, local advisers could not cope with the demand. By the end of October and start of November many of these firms stopped taking new business because they were ‘overwhelmed’.

For steelworkers who had made up their minds they wanted a transfer, many went to ‘travelling advice firms’ who had come to South Wales from other areas of the UK. Reports began to circulate from Port Talbot and other British Steel areas that some advice firms were using marketing techniques such as leafleting and ‘chicken and chips’ meetings to win over steelworkers as clients. The deadline was then moved to the end of January 2018.

Ten UK adviser firms have been prohibited from offering pension transfer advice and 40 members have joined a group legal action against them.

Currently, local politicians, MPs and the media have been very vocal about the situation. Their targets are the UK Financial Regulator [FCA] and the Pensions Regulator both of which have been accused of intervening too late and of not doing enough to stop the abuse. Even the Financial Services Compensation Scheme [FSCS] has come in for criticism for setting aside £10 million to provide for potential claims, this being deemed to be an attack on UK taxpayers.