Members of the British Steel Pension Scheme have seen their £15 billion pension pot affected after a merger by parent company, Tata Steel. As a result, many members of the scheme became victims of financial mis-selling. We look at how and why this happened.
British Steel Pension Scheme
The British Steel Pension Scheme issue began when Tata Steel, owner of the scheme, announced merger plans. The merger saw the scheme split from Tata Steel. In return, the British Steel Pension Scheme received £550 million and a 33% equity stake in Tata Steel UK.
Who is liable for the British Steel Pension Scheme?
The split from Tata Steel saw scheme members forced to make a decision on the future of their pension. The 130,000 members of the scheme were given three options:
- Remain in the current scheme, which was transferred to the Pension Protection Fund in March 2018
- Move to the new British Steel Pension Scheme, BSPS2
- Transfer to a private pension
Mis-selling complaints
Many British Steel Workers sought independent financial advice before making their decision. Unfortunately, unscrupulous advisers recommended that workers transfer their pensions out of the scheme, with many being advised to invest into self-invested personal pension plans, or SIPPs, even though this wasn’t necessarily the best option for them.
The scheme’s trustees have said that, since March 2017, it has processed 2,600 pension transfers with a total value of £1.1bn.
After making their investment decisions, many members of the scheme claim that the advice they received has left them worse off, with some having lost as much as £200,000.
This is because SIPPs are designed for experienced investors with large pension pots. The works did not have the knowledge to make a safe investment, relying solely on the advice they received. Their advisors recommended they invest in schemes with a high level of risk and high charges that many members were unaware of.
The Financial Conduct Authority (FCA) is now investigating 17 companies that took advantage of the limited options of scheme members.
British Steel workers who have invested in SIPPs are likely to have been the victims of mis-selling and could be eligible for compensation.
If you were mis-sold a pension following the British Steel Pension Scheme changes, get in touch today. Our expert team can offer advice and resources on a no win, no fee basis.