New guidelines from the Financial Services Compensation Scheme (FSCS) mean that all steelworkers who lost money after transferring out of the British Steel Pension Scheme (BSPS) will receive the maximum payout of £50,000. But will BSPS members still be left out of pocket?
Steelworkers were forced to transfer out of their BSPS pots after the Tata Steel merger. This left many steelworkers with two options. They could transfer into the new pension scheme, BSPS2. They could also invest into a self-invested personal pension (Sipp) of their choice. With the latter, they could only transfer out of the scheme following advice from an independent financial adviser.
However, with £14bn in pension pots at stake, many advisers took this as an opportunity to convince steelworkers to transfer into unsuitable schemes. This led to a huge mis-selling scandal which has left thousands of BSPS members out of pocket. Many have lost their life savings and the FSCS is helping them to get this money back.
Payouts for BSPS members
The current maximum payout limit from the FSCS is £50,000. Steelworkers currently receive up to 30 percent less than the maximum from the FSCS. However, this does not reflect the amount lost in the average transfer.
The average transfer for a British Steel pension was worth around £400,000, with some worth up to £1m. This could mean that some people would be compensated with just five percent of their entire pension pot. We are urging steelworkers to get in touch, as we can provide alternative routes including court action to ensure they aren’t left out of pocket.
If you transferred out of the British Steel Pension Scheme following advice, we can help you get your pension pot back. Get in touch for support and advice from our legal experts to begin your complaint.