Guardian :
The retirement plans of tens of thousands of steel workers have been thrown into disarray after their pensions were pushed into the Pension Protection Fund, the government lifeboat for failed schemes.
The 122,000 members of the British Steel pension scheme (BSPS) have until Friday to decide whether to stay with the scheme, join a new one with reduced benefits set up by Tata Steel, or transfer to a personal plan.
Tata was forced to offload the £15bn BSPS, to pave the way for a 50-50 merger of its European operations with Germany’s ThyssenKrupp to create the second biggest steel producer in Europe after ArcelorMittal.
It is thought more than 20,000 members had still not indicated a decision to leave by the deadline. As a result, they will default into the PPF – a move that is likely to see their retirement savings dramatically slashed.
The PPF steps in to save schemes when they face collapse, meaning savers do not lose everything. Stephen Kinnock, the Labour MP for Aberavon where Tata’s Port Talbot steelworks is situated, said: “It’s deeply worrying that we have a huge number that have not responded.
“Why was the PPF the default? Why on earth wasn’t BSPS 2 the default? I have written to [the work and pensions secretary] David Gauke a few weeks ago about this and he still hasn’t responded. It is still possible for the government to step in and sort this out.”
Allan Johnston, the chairman of the BSPS trustees, said the situation was a concern, because for around 99percent of pensioners the new scheme, set up by Tata, still represents the best option.
Alan Rubenstein, the chief executive of the PPF, disagreed, saying “most, but not all, BSPS pensioners would be financially no worse off or marginally better off in the new scheme”.
The BSPS said the deadline could not be extended because it would cost the pension scheme an additional £200m if the transfers were not completed by the end of January.
The retirement plans of tens of thousands of steel workers have been thrown into disarray after their pensions were pushed into the Pension Protection Fund, the government lifeboat for failed schemes.
The 122,000 members of the British Steel pension scheme (BSPS) have until Friday to decide whether to stay with the scheme, join a new one with reduced benefits set up by Tata Steel, or transfer to a personal plan.
Tata was forced to offload the £15bn BSPS, to pave the way for a 50-50 merger of its European operations with Germany’s ThyssenKrupp to create the second biggest steel producer in Europe after ArcelorMittal.
It is thought more than 20,000 members had still not indicated a decision to leave by the deadline. As a result, they will default into the PPF – a move that is likely to see their retirement savings dramatically slashed.
The PPF steps in to save schemes when they face collapse, meaning savers do not lose everything. Stephen Kinnock, the Labour MP for Aberavon where Tata’s Port Talbot steelworks is situated, said: “It’s deeply worrying that we have a huge number that have not responded.
“Why was the PPF the default? Why on earth wasn’t BSPS 2 the default? I have written to [the work and pensions secretary] David Gauke a few weeks ago about this and he still hasn’t responded. It is still possible for the government to step in and sort this out.”
Allan Johnston, the chairman of the BSPS trustees, said the situation was a concern, because for around 99percent of pensioners the new scheme, set up by Tata, still represents the best option.
Alan Rubenstein, the chief executive of the PPF, disagreed, saying “most, but not all, BSPS pensioners would be financially no worse off or marginally better off in the new scheme”.
The BSPS said the deadline could not be extended because it would cost the pension scheme an additional £200m if the transfers were not completed by the end of January.
