The Financial Conduct Authority (FCA), The Pensions Regulator (TPR) and The Single Financial Guidance Body (SFGB) today welcomed an independent review by Caroline Rookes into communications and support provided to British Steel Pension Scheme (BSPS) members during the 2017-18 pension restructuring exercise and the ‘Time to Choose’ exercise.
The review, commissioned by TPR, proposes a number of recommendations for the regulatory and consumer bodies to help savers make the right decision about whether to transfer their pension pots from a defined benefit scheme.
In a joint statement, the organisations said:
'We thank Caroline Rookes for producing her independent review which will ensure that important lessons are learned from the experiences of the members of the British Steel Pension Scheme.
'We will now consider how we will act on the report’s recommendations including, where appropriate, having discussions with the Department of Work and Pensions (DWP).
'We are already working closely together to provide an increased level of support to trustees and scheme members where there is uncertainty around the future of a defined benefit (DB) pension scheme.
'We are also today publishing a joint protocol to ensure we work in a co-ordinated way to support members of pension schemes. Our joint working also includes providing letters for trustees to send members alerting them to the risks of transferring out of DB pension schemes and giving practical information. The letter has already been sent to 31 pension schemes.'
Lesley Titcomb, Chief Executive of TPR, said:
'We welcome the report which acknowledges the good outcome secured for members through an innovative restructure of the pension scheme which we approved. The arrangement led to a £550m cash contribution to the British Steel Pension Scheme and brought certainty for 130,000 scheme members. It was a strong outcome because the vast majority of members made an active choice with most opting into the new scheme.
'We are grateful to Caroline Rookes for identifying a number of useful themes in her review which will help ensure pension savers are less likely to make transfer choices which are not in their best interests. We will now work together with trustees and the government so that we can all address the review’s recommendations.
'By working closely with the FCA, TPAS and now the Single Financial Guidance Body (SFGB), we are determined to help minimise a repeat of the difficult circumstances in which some members of the British Steel Pension Scheme have found themselves.'
Megan Butler, Executive Director of Supervision - Wholesale, Investment and Specialist at the FCA, said:
'We welcome the recommendations put forward by Caroline following what has been a comprehensive review. The report is an honest, impartial account of what was a difficult and sensitive situation.
'The FCA stands by the action it took in those challenging times but, as with every case where we have had to intervene, there are always important lessons to be learnt. The FCA remains firmly committed to working with TPR and the SFGB - and other organisations - to ensure we are all working together to continue to protect pension savers and take on board the lessons from British Steel.
'Much of this work is already underway, and has been since early 2018 - and our joint protocol is the product of that initial work. However, Caroline has made some further recommendations that we will be discussing with our counterparts at TPR and the SFGB.'
John Govett, Chief Executive of the Single Financial Guidance Body, said:
'We welcome the review by Caroline Rookes into the British Steel Pension Scheme.
'The review makes a number of practical recommendations on how we can work with trustees and other industry bodies to better protect members and help people in restructuring situations make informed decisions about their retirement savings.
'We will be looking carefully into how we can take forward the report’s recommendations under the wider work of the SFGB; specifically, the importance of collaboration and working together with regulators and the pensions industry, which will be key to providing better consumer protection.
'If you have any concerns about pensions contact The Pensions Advisory Service for free on 0800 011 3797.'
Notes to editors:
- The joint FCA, TPR and TPAS protocol addresses some of Caroline Rookes’ recommendations including the need for ‘early intervention and sharing intelligence between the public bodies’, and for clear communication materials for trustees in future scheme restructurings. As this work began in early 2018, it was not able to take account of Caroline Rookes’ report - however, the FCA, TPR and TPAS are considering those recommendations that were not immediately addressed.
- TPR’s primary focus in this case was to secure a strong outcome for members of the British Steel Pension Scheme (BSPS) through a major restructuring.
- The Regulatory Apportionment Arrangement that TPR approved in 2017 brought greater certainty for around 130,000 scheme members, secured a significant cash contribution to the BSPS and minimised the impact on the Pension Protection Fund (PPF). TPR published a report of the decision to approve the RAA which can be read here.
- The Work and Pensions Select Committee, in its report published 15 February 2018 recommended that The Pensions Regulator 'conduct a review of the information and support provided to BSPS members as part of the Time to Choose exercise, incorporating feedback from the scheme members.'
- TPR took the decision to make this review independent, and to include the joint work it undertook with the FCA and the Pensions Advisory Service (TPAS) during the ‘Time to Choose’ exercise to ensure it was comprehensive and objective.
- The FCA is the regulator for the providers of personal pensions, including stakeholder personal pensions, self-invested personal pensions and workplace (group) personal pensions. These are all forms of defined contribution (DC) pensions. The FCA also regulate the advice (including pension transfer advice) given by regulated advisers, asset managers and other firms that provide investment services.
- The FCA’s powers are underpinned by the Financial Services and Markets Act 2000, and its regulatory remit is defined by the Financial Services and Markets (Regulated Activities) Order 2001.
- In October 2018, the FCA and TPR published a joint strategy aimed at strengthening their relationship, and taking joint action to deliver better outcomes for pension savers and those entering retirement.
Single Financial Guidance Body notes:
The SFGB creates 1 organisation from the 3 existing providers of government-sponsored financial guidance:
- The Money Advice Service
- Pension Wise
Bringing together for the first time the provision of debt advice, money guidance and pensions guidance.
The SFGB is funded by levies on both the financial services industry and pension schemes. The new body is sponsored by the DWP but will also engage with HM Treasury, which is responsible for policy on financial capability and debt advice.
The Pensions Advisory Service (now part of the SFGB):
- TPAS was an independent organisation that was grant-aided by the DWP. It has a workforce of paid pensions specialists who have many years’ experience working in the pensions industry.
- TPAS provides a national pensions helpline answering general questions on pensions and helping savers make informed decisions about their retirement options. The helpline is available on 0800 011 3797 from 9am to 5pm Monday to Friday. It also provides an online webchat service, accessed via its website, operating 9am to 6.20pm Monday to Friday with an evening session every Tuesday from 7pm to 9pm. Additionally, TPAS also delivers the telephone channel for the Pension Wise service.
- TPAS has set up bespoke numbers for pension schemes where there are specific circumstances that may give rise to a high volume or complex questions by members. A bespoke number was set up for British Steel members in November 2017 at the request of the FCA.
- You can find out more about the Pensions Advisory Service at www.pensionsadvisoryservice.org.uk