Following on from our previous blog regarding the British Steel Pension Scheme, Lewys explains the recent developments and changes within the Scheme.
Approval of the RAA
In our last blog, Warren explained the proposed Regulated Apportionment Arrangement (RAA) and the effect this would have on members of the British Steel Pension Scheme. On the 11th August 2017, there was a Trustee Press Release confirming that the RAA had been approved. All members, including pensioners, now have the option to move their benefits to the BSP2 or to the Pension Protection Fund (PPF). Deferred members have the further option of transferring out to another scheme altogether. A website has been set up by the Trustees to provide additional information to support member’s decisions.
The Trustees have set out the following timeline:
11th September 2017 – RAA takes effect
October 2017 – Each member will receive personal information to inform their decision
December 2017 – Deadline by which to make a decision
March 2018 – New scheme begins and British Steel Pension Scheme is moved into the PPF.
This long-awaited decision finally brings some clarity to the members of the British Steel Pension Scheme. A few weeks ago there was a lot of panic surrounding the scheme, for fear that the RAA would fall through and all members would end up in the PPF without warning. This welcome announcement gives all members some time to breathe and a timescale by which to make their choice. If you are near retirement this could be one of the most important decisions in your life – it is vital that you seek independent financial advice before making your decision.
A Little Bit of Good News
Following the approval of the RAA, there have been a number of rumours regarding the actuarial reduction of transfer values. On Friday afternoon (25th August 2017), the Trustees released another important update on their website. As a result of Tata Steel giving £550 Million to the British Steel Pension Scheme, the 8% actuarial reduction is being reassessed.
It is expected (not guaranteed) to reduce from 8% to around 5%. This will cause an uplift to all members’ current transfer values of approximately 3.25%. Although not the full amount like a lot of members would have liked, this is a nice bonus for those who had accepted that the reduction would not be lifted.
The Trustees have stated that they will issue revalued transfer figures to all members by October. Further to this, for all those who have already received their transfer values, or even sent in their paperwork requesting a transfer, the Trustees are automatically holding back every transfer until a decision is made at the end of September, and will recalculate their transfer values before transferring out. To reiterate, you do not need to request a new transfer value to benefit from the uplift.
Unfortunately, those that lose out are those that were quickest off the mark when the transfer values increased around a month ago. For those whose transfer has already completed (i.e. funds have left BSPS and landed with recommended pension provider), there can be no uplift in transfer values. There is no mandatory cancellation period when transferring a final salary pension, so the Trustees are highly unlikely to accept your pension funds back in order to pay out a higher transfer value again.
If you are a deferred member of the British Steel Pension Scheme and would like to discuss your options with an adviser, please get in touch.
THIS BLOG DOES NOT CONTAIN FINANCIAL ADVICE. INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS.
IT IS A REQUIREMENT FOR ANY MEMBER OF A FINAL SALARY PENSION WITH A TRANSFER VALUE OF MORE THAN £30,000 TO RECEIVE IMPARTIAL FINANCIAL ADVICE.