British Steel Pension Scheme trustees were urged to discuss “the importance of obtaining independent financial advice” with members, amid a major restructuring of the scheme, a report has revealed.

The Pensions Regulator report also referenced “significant concerns about the advice... by certain financial advisers” given to some members considering the option to switch from a DB to a DC scheme.

The Regulatory Intervention Report, published yesterday, covers TPR’s decision to approve a major restructuring of the British Steel Pension Scheme (BSPS) by Tata Steel UK (TSUK) last year.

In early 2016, Tata Steel Limited decided that it was no longer prepared to continue funding TSUK, or consider funding a turnaround plan, without a restructuring of the BSPS.

The TPR report discussed what actions had been taken about communicating with members, including reviewing information documents they were given.

It stated: “We have also urged the trustee to talk to members about the importance of obtaining independent financial advice, and asked them to give out our pension scams leaflet when sending out other communications about their decision, as per our published guidance.

“Before transfers to the New BSPS and the PPF, members who were more than one year from reaching their normal retirement age had the option to take a cash equivalent transfer value and transfer this to another occupational pension scheme or a personal pension scheme.

“Our view is that generally it is not in members’ best interests to give up the certainty of income available from a DB scheme in favour of reliance on a defined contribution scheme.

“We are aware of significant concerns about the advice given to some members’ considering this option by certain financial advisers and have worked with the FCA and The Pension Advisory Service to ensure that affected members were made aware of the appropriate sources of advice and guidance in order to help them consider their options.”

The report highlighted how the restructure “represented a significantly better outcome for the BSPS than would be achieved under the insolvency of the sponsoring employer, the only other remaining alternative”, officials said.

TPR insisted that cash be provided upfront to the BSPS by the Tata Steel Group, which eventually offered a payment of £550 million, along with a 33% equity stake in TSUK.

Nicola Parish, executive director for frontline regulation at TPR, said: “This was a highly complex case affecting thousands of pension savers. Our report highlights how we took a number of decisions to deliver the best available outcome for scheme members in difficult circumstances.”

The 125,000 BSPS members recently had to decide whether to stay in the existing scheme, which will go into the Pension Protection Fund, or join a proposed new scheme.
Establishment of a new pension scheme is “not a foregone conclusion”, TPR said. A decision is due to be announced in March.