British Steel Pension Scandal Uncovered

The British Steel Pension Scheme was a defined benefit pension scheme that faced difficulties. The beneficiaries of the pension were told in 2017 that they had to choose 1 of 3 options; they could transfer their benefits into the Pension Protection Fund (PPF); they could transfer their benefits to the British Steel Pension Scheme 2 (a scheme that was created to avoid the Steelworkers from losing a substantial amount of money) or transfer their funds to a personal pension.

This left the door wide open for advisers to provide the Steelworkers with financial advice on which option would be best for them, however, it quickly came to light that some of these advisers were more focused on lining their own pockets rather than assisting those in need of urgent financial advice.

Many Steelworkers were advised to transfer their benefits into a personal pension scheme and to give up the benefits offered by the British Steel Pension Scheme 2 and the PPF with the requirement to pay the adviser a substantial fee on top of this!

Nearly 8,000 Steelworkers were advised to transfer out of the scheme and the FCA was forced to intervene. They wrote out to the members who transferred to a personal pension, telling them that they may have received negligent advice and that they may be eligible for compensation.

The FCA reviewed the advice provided to a sample of Steelworkers and found that only 21% of these received suitable advice, meaning that the vast majority of the advice provided was either unsuitable or unclear.

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