Now that the deadline for choosing your option has passed, some of these questions are not relevant any more. But many of the others could still be useful, so we have left them all available to read. For each question, we’ve tried to give you an answer that will help most members choose between the new scheme and the Pension Protection Fund. To do that, we’ve left out some details and technical information that we felt wouldn’t be helpful. And we’ve given an answer that should be right for most members, but might not be right for you. This means that some of the answers are quite general, and some will not apply in certain situations.
Tata Steel UK (TSUK) is no longer able to support the pension scheme without becoming insolvent. As a result, following lengthy discussions between the Trustee, TSUK, the Pensions Regulator and the Pension Protection Fund (PPF), TSUK has made a final one-off contribution to the current scheme of £550 million and is now free from any obligations to the current scheme. The current scheme must start moving into the PPF. That will happen on 29 March 2018.
Changing the rules would have made it easier for Tata Steel UK to keep the current scheme. But that would have needed a change in the law. The government ran a consultation in 2016 and no change is being made. So instead, we’ve set up a new scheme, the New British Steel Pension Scheme, which you can choose to join. The new scheme will provide the same benefits as the current scheme, except that future annual increases will be lower.
The current scheme’s assets will be divided between the new scheme and the Pension Protection Fund. Exactly how they’ll be divided depends on which members go into each.
See the Question and Answer section on transferring out.
It’s due to start moving on 29 March 2018. For more about what happens after that, see ‘Questions about the Pension Protection Fund’
Your State Pension Age depends on how old you are. You can find out your State Pension Age on the government’s website.
No. The earliest you can take your State Pension is your State Pension Age. You are allowed to start taking it late.
This question will be relevant to you if you are under age 55 and have the option in the current scheme to start your pension before age 55. Both the new scheme and the Pension Protection Fund (PPF) will allow you to keep your protected age if you currently have one, however you must have transferred out any defined contribution benefits you have in the current scheme before 28 March 2018.
If you have defined contribution benefits in the current scheme, the Trustee will write to you with details of your options.
The PPF is a public corporation set up by Parliament in 2005. It acts as a safety net to protect members of defined benefit pension schemes. It makes sure scheme members get at least PPF level benefits.
The PPF has taken on over 230,000 members from around 900 schemes. In most cases, members move into to the PPF when the sponsoring employer of their pension scheme goes bust. However, very occasionally, the PPF can also consider taking on a scheme without the employer going bust.
For this to happen, the sponsoring employer needs to show that its liabilities, including its pension scheme, will currently make it go bust. A restructuring can then be proposed which results in the PPF taking on the scheme without waiting for the employer to go bust. This is done through a ‘Regulated Apportionment Arrangement’ or ‘RAA’. An RAA can only happen if the scheme’s Trustee and employer both agree, the Pensions Regulator approves the arrangement and the PPF doesn’t object.
For more about the Pension Protection Fund, including Frequently Asked Questions, please go to their website.
No. Whilst the PPF was set up by Parliament, it is run independently at arm’s-length from Government. It is not taxpayer-funded. Instead the PPF collects a compulsory annual levy, a little like an insurance premium, from the near 5,800 schemes it protects. The PPF is also funded by the assets of the schemes that move into it and from investment returns on the existing PPF assets.
The PPF is confident that it is in a strong financial position and well equipped to take on members who choose to stay in the current scheme. The PPF has been protecting members since 2005, and it is already responsible for over 230,000 members in around 900 transferred schemes.
The current scheme is due to start moving into the PPF on 29 March 2018. At that point, a PPF ‘assessment period’ starts. During the assessment period, the PPF and others check that the information about members moving into the PPF is accurate, and that they are getting the correct benefits. The PPF also assesses the scheme’s funding level. This work has to be done before the scheme can move fully into the PPF. It is a complicated process so could take a few years to complete.
Until the scheme fully moves into the PPF, benefits will be paid in line with the current scheme rules, or at PPF levels if those are lower. If members or dependants would be due a higher benefit in the PPF than in the current scheme, the PPF will backdate this higher benefit once the assessment period ends. This payment would cover the length of time from the start of the assessment period (or from when the member or dependant started to receive their pension, if that is later) to the date when the scheme fully moves into the PPF.
However, once the current scheme starts moving into the PPF on 29 March 2018, the way that early retirement pensions and tax-free cash are calculated will be brought into line with how the PPF calculates them. This means that members who are going into the PPF and start taking their pension after 29 March 2018 will be able to take advantage of the PPF’s more favourable calculations for early retirement and tax-free cash straight away.
They could, though the benefits that the PPF provides are set out in legislation. It is possible that the government could change this legislation. For example, quite recently the amount of the cap that applies to certain members’ PPF benefits was increased for members with more than 20 years’ pensionable service.
The PPF is confident that it is currently in a strong financial position. If it became less strong in the future, there would be a number of options available to the PPF. One option would be to increase the levy that the PPF collects each year from the schemes it protects. The PPF legislation does allow the PPF or the Government to change member benefits – for example, it could reduce the maximum yearly increases it provides. However, reducing benefits would only be considered as an absolute last resort.
Usually, yes. But very occasionally, the PPF can also consider taking on a scheme without the employer going bust. For more on this, see ‘What is the Pension Protection Fund?’
If you stay with the current scheme and start moving into the Pension Protection Fund (PPF), the PPF will start paying your pension with effect from 29 March 2018. There will be no break in payments and you’ll still get a monthly pension.
However, there will be a slight difference in when future pensions are paid. The New British Steel Pension Scheme will mirror the old scheme and, for the vast majority of pensioners, continue to pay pensions on the last working day of the month for the calendar month in advance.
The PPF also pays a calendar month in advance but pays on the first of the month. So you’ll see a slight change if you choose the PPF. This change is likely to take effect from the 1st May 2018 payment. If you’re paid on a different day of the month at the moment, your pension will also be brought into line with everybody else’s and you’ll be paid on the first of the month in the PPF.
The PPF also pays annual increases at a different time. The PPF pays these increases on 1 January each year. The New British Steel Pension Scheme will continue, like the old scheme, to pay increases at the start of April. As such, the first increase date during the PPF assessment period will be 1 January 2019. For those that are eligible for this increase, and have been a pensioner since 29 March 2018, the increase amount will be pro-rated for the 9 months that the scheme will have been in the PPF assessment period.
Yes. If you’re under your normal retirement age (usually 65) on 29 March 2018, the benefits you get from the Pension Protection Fund (PPF) would be capped at a certain level. If you have 21 or more years’ service in the scheme, your cap is higher than for other members. A higher cap means you’re less likely to be affected by it, or, if you are affected, you’d keep more of your benefits.
The cap is increased by three per cent for each full year of pensionable service above 20 years, up to a maximum of double the standard cap. There is a list of the standard caps that apply here.
These factors are reviewed annually and the factors may change before you start taking your benefits.
In the current scheme, pensions increase every year. The cost of these increases could be considerable over a long period of time. Depending on when they were earned the new scheme will also increase pensions every year, but not by as much. This should make it affordable.
Although the future is hard to predict, we designed the new scheme to be affordable. So we’re confident it will be able to pay benefits to members, both now and in the future. If TSUK became unable to support the new scheme, the new scheme has been designed so that it and its members would still be protected by the PPF.
No, the new scheme is ‘closed’, like the current scheme is.
In the current scheme, pensions increase every year. The cost of these increases could be considerable over a long period of time. Depending on when they were earned the new scheme will also increase pensions every year, but not by as much. This should make it affordable.
The new scheme’s benefits are the same as the current scheme, except for offering lower yearly increases. For certain members in certain situations, the PPF offers higher benefits than the current scheme, and so higher than the new scheme. For example, if when you start taking your pension you swap some of your pension income for tax-free cash, the PPF is more generous when it works out how much cash you get. The new scheme has to be affordable, and it would have been too expensive to give all members better benefits than the PPF.
We fully expect the new scheme to go ahead as planned. However, there are some situations which would mean it doesn’t go ahead. If it doesn’t, all members will move into the Pension Protection Fund, even if they have told us they want to switch to the new scheme. The main situations which would stop the new scheme happening are:
• If the assets that would transfer from the current scheme to the new one wouldn’t be enough to provide a big enough buffer over and above the expected cost of paying benefits and expenses
• If the assets of the new scheme would be less than £2 billion
These situations depend on which members choose to join the new scheme, and whether there are large, unexpected changes in the value of the current scheme’s investments.
If you choose the new scheme, you’d be a member of that scheme by 28 March 2018. So from that point it provides your benefits and you have no connection with the old scheme.
To run the current pension scheme we have always had certain costs, including managing the scheme’s investments and administering members’ benefits. As the Trustee, we also have a responsibility to take professional advice, and paying these advisers is part of the cost of running the scheme.
The process of preparing to move the current scheme to the Pension Protection Fund, and setting up the new scheme, is complicated. To help us get the best possible deal for members, we have appointed specialist advisers to work on our behalf. We’re also spending money on writing to members, making sure you get the information you need, and keeping you up to date with events. A lot of these costs are being met by Tata Steel UK.
While it’s not yet possible to put a final figure on these costs, they have been greater recently than they were in previous years. However, we always try to get the best value we can from the money we spend. The total we are spending has no impact on the pensions that the new scheme can afford to pay.
Members of pension schemes have rights to benefits that are protected by law. They cannot be changed in a way that might negatively affect a member except with the member’s consent, or after consulting the member if the changed benefits will still have the same overall value. The law could of course change, but this would affect all similar pension schemes, not just the New British Steel Pension Scheme.
There are three ways that the new scheme might give extra money to members. Here’s a summary:
1. When the shares that the Trustee of the new scheme will hold in Tata Steel UK Ltd are sold, or dividends are received from those shares, and this is enough to pay extra benefits. The Trustee of the new scheme would decide which members would get a payment. Only members who built up some benefits before 6 April 1997 could be considered. The Trustee could pay a lump sum, or promise a future lump sum, or pay extra pension.
2. If the funding level on a buyout basis reaches at least 103%. This is a measure of the cost of purchasing annuity policies for all members with an insurer, which would replace members’ pensions. The Trustee would decide which members would get an extra payment. All members could be considered.
3. If the outcome of the 31 March 2021 actuarial valuation is better than expected, and no payment has been made under point 2 above. Pensioners who built up some of their benefits before 6 April 1997 could get this payment. The payment could be a lump sum or extra pension.
The current scheme is run by 14 trustees. Half are Company-Nominated Trustee Directors (CNTDs) appointed by Tata Steel UK and the other half are Member-Nominated Trustee Directors (MNTDs). Six of the MNTDs are appointed by the National Trade Union Steel Co-ordinating Committee and one is chosen from eligible pensioners who nominate themselves for appointment when there is a vacancy. Allan Johnston is the Chairman. He is a CNTD and is a British Steel Pension Scheme pensioner.
The new scheme will be run by six trustees. There will be two CNTDs appointed by Tata Steel UK, two MNTDs, and two Independent Trustee Directors (ITDs).
Allan Johnston will be one of the CNTDs and will be Chairman. Allan’s term of appointment will run to 31 March 2019. Tata Steel UK has not yet appointed the other CNTD.
As part of the transitional arrangements, Shaun Corten and Peter Rees will be the new scheme MNTDs. They are both trustees of the current scheme. Soon after the new scheme has started, the new Trustee board will invite eligible members to nominate themselves as MNTDs and will choose two MNTDs from those nominations to succeed Shaun and Peter.
The first ITDs are being chosen by the current scheme trustees and Tata Steel UK together. In future, replacement ITDs will be chosen by the new Trustee board. When Allan Johnston retires from the Trustee board, it will choose one of the ITDs to be the new chair.
We will let you know when all six members of the new scheme Trustee have been appointed and ask them to tell you something about themselves.
The new scheme trustees will make sure that the new scheme is ready to start paying benefits for members who switch to it. The Trustee will also make sure that suitable arrangements are in place for running the new scheme and for investing the assets that will be received from the current scheme when members switch. A lot of this work has already been done.
These arrangements for running the new scheme have been agreed by us with Tata Steel UK after guidance from the Pensions Regulator.
A takeover or merger involving Tata Steel UK (TSUK) wouldn’t necessarily mean that TSUK became unable to support the new scheme. If it did, the new scheme has been designed so that it and its members would still be protected by the Pension Protection Fund (PPF).
Any company that takes over or merges with TSUK would not have any claim to the shares owned by the new scheme. If a takeover or merger increases the value of these shares, this would be to the benefit of the scheme.
Any company that wanted to buy the new scheme’s TSUK shares would have to make a separate offer to the Trustee. The Trustee would consider the offer on behalf of the members. One of the ways that the new scheme might give extra money to members is that the shares are sold or provide dividends. If this is enough to pay extra benefits the Trustee of the new scheme would decide which members would get a payment. Only members who built up some benefits before 6 April 1997 could be considered. The Trustee could pay a lump sum, or promise a future lump sum, or pay extra pension.
In the event of a takeover or merger, TSUK will remain as sponsor of the new scheme if its status within a wider group changes. Members in the PPF won’t be affected by a takeover or merger involving TSUK.
We’re very confident the new scheme is robust and well-funded. Tata Steel UK is the sponsor so has responsibility for any deficit. We don’t think we’ll need that support, because the scheme is designed to be self-sufficient. The new scheme’s investment strategy is low-risk. There should be enough money in the scheme to pay benefits, even if there’s only a modest level of return on our investments. There is also a buffer of extra money in the scheme, just in case things don’t turn out as expected.
However, if for any reason in the future the new scheme can’t carry on, it is designed to be protected by the PPF. So the scheme could enter the PPF and members would then receive benefits at PPF levels.
Each member can choose one of these two options:
1. Move with the current scheme into the Pension Protection Fund (PPF) and get benefits from that.
2. Switch to the new British Steel Pension Scheme and get benefits from that.
Non-pensioners who are more than a year from normal retirement age (usually 65) could choose instead to transfer out of the current scheme, to a different pension arrangement.
If you don’t make a choice, you’ll stay in the current scheme and move with it into the Pension Protection Fund. But we want to make sure that every member thinks carefully about what is the right choice for them, and makes a positive decision about their future. So we want every member to tell us their choice, whatever it is.
We need to have your completed option form by 22 December.
For almost all pensioners, it will be clear which option is best for them. For many non-pensioners, the choice won’t be quite so clear. It will depend on things like what age they’re planning to start taking their benefits and whether they’ll want to swap some of their pension income for tax-free cash. We don’t know what all these members want to do, so we can’t say exactly how many members would be better off in the new scheme.
No, you should check if it is right for you, as some members could get better benefits from the Pension Protection Fund. Please read the information we send you, which will help you choose. If you need more help choosing, you can call the helpline that we are setting up.
The process of providing option packs with personal figures for 130,000 members of the current scheme has been highly complex, and had to be done in a limited time period. We have provided the information that we think members will find most useful in making their choice of whether to choose the new scheme or the PPF.
Also, the new scheme and the PPF work out the benefits you can get in different ways, with different plus points and negative points, and so it’s not always possible to compare them directly.
The example PPF figures we do provide should help you get a good idea of what you would get, and how that compares to the new scheme. If you want to talk these figures through with an impartial expert, please phone our helpline.
It will be clear for most members which option is better for them, once they’ve read their option pack. Which option is better for you will depend on things like whether you’re already taking your pension, and if you’re not, what age you’re planning to start taking it and whether you’ll want to swap some of your pension income for tax-free cash. For some members, it won’t be so clear, so they might need more help to choose. You can phone our free, impartial helpline to talk it through with a pension expert.
For some members, it might not look like there’s much difference. But remember that you could be getting a pension income from the option you choose for many, many years. Over that time, small differences can really add up. So please read your option pack, and think carefully about which option to choose. If you need more help choosing, you can call the helpline.
If someone has power of attorney for a member, so is legally allowed to make financial decisions for them, then they can make this choice for the member. If a member is still legally responsible for their own financial decisions, then they would have to make the choice themselves. If the Pensions Office already knows that you have power of attorney, then we will send the option pack to you. If you have power of attorney for a member, please contact the Pensions Office by post at the address below, including a certified copy of your power of attorney document – if you haven’t already done so.
Writing from the UK (no need for a stamp)
British Steel Pension Scheme
FREEPOST RLXS-ZXKT-AUER
Glasgow G2 7BW
Writing from outside the UK
British Steel Pension Scheme
105 Waterloo Street
Glasgow G2 7BW
United Kingdom
If you need information about making decisions on behalf of someone else, go to www.gov.uk/make-decisions-for-someone.
Children under 18 who are receiving a dependant’s pension in the current scheme aren’t allowed to choose to switch to the new scheme. They will move with the current scheme into the Pension Protection Fund. If a child received an option pack that says they can’t switch to the new scheme, then that situation can’t change, even if they turn 18 this year.
If you’re a non-pensioner and will be under normal retirement age on 29 March 2018, your option pack has examples of what some members in your situation might choose and why. Your pack also mentions that there are more examples on this website.
The extra examples here only apply to you if you’re a non-pensioner and will be under normal retirement age on 29 March 2018. They don’t apply to you if your defined benefits are a pension plus a lump sum.
Jimmy, who is planning to retire at 65 and thinking about his wife’s pension
Jimmy is planning to retire at 65, his normal retirement age. Ignoring the yearly increases his pension might get between now and then, he’d get a starting pension of £8,000 a year from the new scheme. The Pension Protection Fund (PPF) would give him 90% of that, which is £7,200 a year.
Jimmy’s wife doesn’t have a pension of her own. He wants to make sure she has the best possible pension if he dies before her. He can see that she’d get more from the new scheme, especially if he decides to take tax-free cash when he retires.
Here’s how the PPF and the new scheme would work for Jimmy, if he takes his pension at age 65:
• In the PPF, Jimmy’s full pension would be £7,200 a year. If he dies, his wife would get £3,600 a year. If he takes tax-free cash of £37,763, he’d get a pension of £5,664 a year. If he dies, his wife would get £2,832 a year.
• In the new scheme, Jimmy’s full pension would be £8,000 a year. If he dies, his wife would get £4,000 a year. If he takes tax-free cash of £36,750, he’d get a pension of £5,512 a year. If he dies, his wife would get £4,000 a year.
Jimmy decides to join the new scheme. He fills in his option form to tell us his choice.
Felix, who might want to transfer out in the future
Felix is still a few years away from taking his pension. He doesn’t know yet what his plans will be, but he thinks he might want to transfer out to a different pension arrangement. He knows that he would probably get a better transfer value if he transferred out of the current scheme rather than from the new scheme. But he wants to keep his options open, so doesn’t want to transfer out at the moment. He knows he won’t be able to transfer out of the Pension Protection Fund, so he chooses the new scheme. He fills in his option form to tell us his choice.
If you’ve already sent in a completed option form, you can still change your mind if you do so before the deadline of 22 December 2017. You’ll have to ask the helpline for a new option form, complete it and send it back before the deadline.
In early October 2017, members got an information pack from us about their options. If you got two packs, this is because we have records for you from two different parts of the scheme. This might be because you built up different periods of service in different sections of the scheme. You need to return both option forms.
Weigh up both parts of your pension
To choose whether to move into the Pension Protection Fund (PPF) or switch to the new scheme, you need to think about the information in both packs. If you have built up more pension in one part than the other, you might want to take that into account. If you need help thinking about your options, you can call our helpline.
Check if the PPF cap affects you
If you move into the PPF and you will be under your normal retirement age (usually 65) on 29 March 2018, there is a cap on how much the PPF will pay you. If our records show that one part of your pension might be affected by this cap, we will say so in your option pack. But for a small proportion of members in this position, it may be that you’re affected when you add together both parts of your pension.
You should add together the pension income you expect to receive and see if that would take you near or over the PPF cap. The cap that applies to you depends on your age when your take your benefits and your length of pensionable service. You can see a list of the cap amounts here. If you think you might be affected by the PPF cap, you might want to take that into account when choosing whether to move into the PPF or switch to the new scheme. If you need help thinking about this, you can call our helpline.
When you have chosen your option, you need to fill in and return both option forms.
No. However, the helpline is impartial and can talk you through your options, for free, so you can get a clearer idea of what to do. They will have a copy of your option pack on the screen in front of them, so they can help you understand the details. But, by law, they can’t tell you what they think you should do. If you want someone to do this, you should talk to an independent financial adviser. You can find one near you by going to www.unbiased.co.uk. You will probably have to pay for their advice. Check before you see an adviser that they are authorised by the Financial Conduct Authority (FCA) with permission to advise on pension transfers. You can look them up on the FCA’s register at www.fca.org.uk. Please also see the question ‘Do I need to watch out for scams?’.
We update this website when we have more information that we can share. You should have got an option pack in October. We sent all members a second newsletter in November.
Talk to an independent financial adviser. You can find one near you by going to www.unbiased.co.uk. You will probably have to pay for their advice. Check before you see an adviser that they are authorised by the Financial Conduct Authority (FCA) with permission to advise on pension transfers. You can look them up on the FCA’s register at www.fca.org.uk.
We’ve set up a free, impartial helpline which you can call to talk through your options. But, by law, they can’t tell you what they think you should do. The same is true for the Trustee, Tata Steel UK and the administration team – they can’t say what they think you should do.
We organised the meetings to be within reach of as many members as possible. When we’ve held member meetings in the past, they’ve been for employee members. So we were able to hold them in small or medium sized venues, often at workplaces. This time the meetings were aimed at attracting as many of our 130,000 or so members as we could, in the time we had. Most members are not employees any more, and are spread all round the country. We needed bigger venues in places that people can get to. There are of course some areas that have more members than others, because members either still work in the industry, or still live nearby.
We carefully analysed the postcodes of where members live, and tried to book venues that are the most convenient for the most people. In some areas, we were limited by the availability of large, suitable venues.
We’re sorry if there wasn’t a meeting that you could get to. There are videos on this website with meeting highlights, so please take a look at them. If you have a question that you wanted answered at a meeting, please ring the helpline – they should be able to help you.
Whether you move into the Pension Protection Fund (PPF) or switch to the new scheme, you will continue to receive your pension. Your pension won’t be reduced, even if you are under your normal retirement age. The main difference you will see is that your future increases might be smaller, depending on inflation. The new scheme offers increases that are the same or higher than the PPF. If you have a spouse, they can get a pension if you die before they do. The pension they can get might be different in the new scheme and the PPF. There will be information about this in your option pack, which we sent you early in October 2017.
If your incapacity pension started after 29 March 2015, and you move into the PPF, they will review your case. The PPF will need to be satisfied that you genuinely qualified for an incapacity pension under the rules of the current scheme. If not, your pension could be suspended or reduced.
If you’re already getting your pension and you’re over your normal retirement age, or getting a spouse’s or dependant’s pension or an incapacity pension, you’ll get the same pension to start with whichever option you choose. For most members, their normal retirement age is 65. What changes for you is that your pension could increase less each year than it used to. The way this works for you depends on exactly what kind of pension you’ve got. But the new scheme would offer you the same or higher future increases than the PPF.
For other members already getting their pension, the main difference between the new scheme and the Pension Protection Fund (PPF) is that the PPF reduces your pension. For most people it reduces it by 10%, so they get 90% of what they were receiving. Some people might have a bigger reduction than that because of the maximum amount that the PPF will pay anyone. The amount of this cap depends on your age and length of pensionable service. For example, in 2017, for someone who is 60 years old and has less than 20 years of pensionable service, the amount of the cap was £32,770. So, no matter how much they were expecting to get every year, once their scheme was moving into the PPF they couldn’t get more than 90% of that, which is £29,493. There’s a list of capped amount on the PPF website.
For all members, the new scheme and the Pension Protection Fund work out yearly increases differently. But the new scheme offers all members the same or better increases than the PPF. There is more about this in your option pack.
Your benefits from the current British Steel Pension Scheme are governed by its trust deed and rules. If you switch to the New British Steel Pension Scheme, your benefits will be governed by its trust deed and rules. If you move into the Pension Protection Fund, your benefits will be governed by the law that relates to the PPF. The new scheme’s trust deed and rules, and PPF legislation, override the information on this website, if there are any inconsistencies between them.
The new scheme and the Pension Protection Fund treat child or dependant pensions in a similar way to each other. However there are some differences.
• A dependant normally gets their pension up to age 18 in the PPF, or 16 in the new scheme.
• If a dependant is in full-time education, they can keep getting their pension up to age 23 (or 25 in some cases) in the new scheme. In the PPF it’s 23 (or 25 in the same cases as the new scheme, if the member has already died).
• If the dependant has a qualifying disability, they could keep getting their pension up to age 23 in the PPF, or for life in the new scheme, if they are incapable of independent living.
• If there is a spouse getting a pension, and only one dependant, the dependant gets 25% of what the member was getting when they died (after any tax-free cash they took) in the PPF. In the new scheme, they get 25% of what the member was getting when they died, or would have been getting if they hadn’t taken any tax-free cash or high/low option.
• If there is a spouse getting a pension, and more than one dependant, the dependants share 50% of what the member was getting when they died (after any tax-free cash they took) in the PPF. In the new scheme, they share 42% of what the member was getting when they died, or would have been getting if they hadn’t taken any tax-free cash or high/low option.
• If there is no spouse getting a pension, and only one dependant, the dependant gets 50% of what the member was getting when they died (after any tax-free cash they took) in the PPF. In the new scheme, they get 50% of what the member was getting when they died, or would have been getting if they hadn’t taken any tax-free cash or high/low option.
• If there is no spouse getting a pension, and more than one dependant, the dependants share 100% of what the member was getting when they died (after any tax-free cash they took) in the PPF. In the new scheme, they share 84% of what the member was getting when they died, or would have been getting if they hadn’t taken any tax-free cash or high/low option.
In the current scheme, a same-sex spouse or civil partner of a member who dies could get no benefits for pensionable service before 1997, except for any guaranteed minimum pension built up after 1988.
If a member starts moving into the Pension Protection Fund (PPF), then dies, a same-sex spouse or civil partner would be treated in the same way as an opposite-sex spouse.
The New British Steel Pension Scheme will make sure that your partner gets the benefits they are legally entitled to. Following a recent court case, if you join the New British Steel Pension Scheme and die with a surviving same-sex spouse or civil partner, the new scheme must treat them the same as an opposite-sex spouse or civil partner. In most cases this means they’ll get a pension worth half of yours, ignoring any tax-free cash you took. Your option pack has more details about what your spouse or civil partner would get. If they are entitled to a guaranteed minimum pension after you die, this will be calculated in accordance with the law.
When most members start taking their pension, they can choose to swap some of their pension income for tax-free cash. This is the case for the new scheme and the Pension Protection Fund (PPF) – though the two options use different methods to work out how much cash you can take. But some members can’t take cash, or can only take a relatively small amount. Reasons for this include:
• In the new scheme, if you have a Guaranteed Minimum Pension (GMP), then you have to receive a certain level of pension income from a certain age. If you swap some of your pension income for cash, your pension income is reduced. If taking a certain amount of cash would mean that your income would be less than your GMP at the appropriate age, you are not allowed to take that cash. This doesn’t apply in the PPF. See the question: ‘How might GMP affect my choice?’
• In the PPF, if your defined benefits are a pension plus a lump sum, you can’t swap any of your pension income for cash. The current and new schemes do allow you to do that, unless your Guaranteed Minimum Pension restricts you.
The new scheme’s benefits are the same as the current scheme, except for paying lower yearly increases. So if you swap some of your pension income for tax-free cash in the new scheme, the amount of cash you get will be worked out in much the same way as in the current scheme, but taking account of the lower yearly increases.
The Pension Protection Fund (PPF) is different in how it works out how much cash you can get. As a result, you normally get more cash for each pound of income you swap. One of the reasons for this is that if you swap income for cash in the PPF, it’s not just your pension that is reduced – the pension your spouse could get if you die before they do is also reduced. In the new scheme, it’s only your pension that is reduced. Another reason is that the PPF uses a different method, or ‘actuarial assumption’, for converting future monthly payments for life into a cash amount.
Whilst for most members the new scheme offers the same or higher benefits than the PPF, it’s not possible for the new scheme to match all the PPF’s benefits in every case. Doing so would make the new scheme unaffordable. For more about this, see ‘Why does the new scheme offer the benefits and increases that it does?’
As the sponsor of the new scheme, Tata Steel UK will from time to time review the calculations the scheme uses to work out the tax-free cash it provides. The PPF’s calculations are also reviewed from time to time. So the difference between the new scheme and the PPF’s calculations could change in the future. But the PPF’s calculations are likely to remain more favourable.
Whether you move into the Pension Protection Fund (PPF) or switch to the new scheme, you will continue to receive your pension. Your pension won’t be reduced, even if you are under your normal retirement age. The main difference you will see is that your future increases might be smaller, depending on inflation. The new scheme offers increases that are the same or higher than the PPF. If you have a spouse, they can get a pension if you die before they do. The pension they can get might be different in the new scheme and the PPF. There will be information about this in your option pack, which we sent you early in October 2017.
If your incapacity pension started after 29 March 2015, and you move into the PPF, they will review your case. The PPF will need to be satisfied that you genuinely qualified for an incapacity pension under the rules of the current scheme. If not, your pension could be suspended or reduced.
No. Certain elements of historical data were not required to be held electronically and so were not available for us to include in your option pack. This data was available when we started paying your pension and we used the correct information to work out your pension.
The law requires the Pension Protection Fund, and allows the new scheme, to pay no yearly increases for benefits built up before 1997. If the new scheme did pay increases for those benefits, it would not be affordable and so could not go ahead.
When the Pension Protection Fund (PPF) pays benefits, the law requires it to pay yearly increases only on any part of those benefits built up after 1997. It can’t pay increases on the part built up before 1997, even if the original scheme would have done. So pensioners who move into the PPF will get no further increases on the benefits they built up before 1997. Other members who move into the PPF will get no increases on the benefits they built up before 1997 after the benefits start to be paid.
When we worked out what the new scheme would offer, we wanted all members to be able to have the same starting amount of pension as they have in the current scheme. The new scheme also has to pay yearly increases on pension that was built up after 1997, once it’s being paid, because that is required by law. The law also requires the new scheme to pay increases for any Guaranteed Minimum Pension (GMP) built up after 1988. We wanted the new scheme to pay increases on the rest of a pension built up before 1997 but this was not affordable.
The increases for pension built up after 1997 will generally be less than the old scheme would have paid, but the same or higher than the PPF would pay.
More information about the increases you would get are in your option pack that we sent you in October. There are also more details about the new scheme’s structure in the question ‘‘Why does the new scheme offer the benefits and increases that it does?’
This answer is a more detailed version of the answer to ‘Why are the changes worse for pension built up before 1997?’
The current scheme does not have enough money to pay all its benefits and it does not have a sponsoring employer able to provide the extra money needed to pay those benefits. So it will start moving into the Pension Protection Fund (PPF) on 29 March 2018.
The benefits members would get from the PPF are generally not as good as the benefits in the current scheme. PPF benefits are set by law and will be the same whatever the funding position of the scheme when it goes into the PPF.
If the current scheme had enough money to pay an insurance company to provide benefits better than the PPF’s benefits, then that is what would happen. But the current scheme does not have enough money to do that.
However, we think that it does have enough money to give members a choice between moving into the PPF or getting benefits from a new scheme. For almost all pensioners and for many other members, the new scheme could provide better benefits than the PPF. But there is not enough money for the new scheme to be able to provide increases to benefits as good as those of the current scheme.
So we had to decide what benefits the new scheme would offer. We had to agree this with Tata Steel UK because they will be the sponsoring employer for the new scheme. They will have to pay money into the new scheme if the amount transferred from the current scheme turns out to be not enough.
We therefore had limited freedom in deciding what benefits the new scheme would offer.
We looked at whether the new scheme could offer better benefits than the PPF for all members in all situations. But PPF benefits are sometimes more generous than the current scheme, and we didn’t think that the new scheme should be more generous than the current scheme. In any case, it would not have been affordable to do that.
A good example of this is ‘commutation factors’. These are used to calculate how much tax-free cash a member gets if they give up part of their pension income when they start taking their pension. The commutation factors for the new scheme will be broadly in line with those used by the current scheme. The PPF has different commutation factors that normally result in more tax-free cash being paid to members. We could not afford to match the PPF commutation factors for members taking their pension in the new scheme without reducing other benefits. And we didn’t think it would be appropriate for the new scheme to offer future pensioners a better deal than they would have had in the current scheme.
We also wanted the amount of pension in the new scheme at the time of switching to be the same as in the current scheme, including increases to date but ignoring future increases. In other words, nobody choosing to switch to the new scheme should have the current amount of their pension reduced. We knew that the PPF will apply a 10% reduction when calculating benefits for members who have not reached normal retirement age on 29 March 2018 (or a bigger reduction if the PPF cap applies) but we did not want to do the same in the new scheme.
This meant that, in order to make the benefits of the new scheme affordable, we had to change the way pensions are increased in the future.
But our options were limited for doing this. The law requires the new scheme to:
• give certain annual increases to pensions in payment that built up after 1997
• give certain increases each year to most non-pensioners, until their pension starts to be paid. These increases are normally less than the current scheme would have paid. This means that the new scheme is legally allowed to use the Consumer Prices Index (CPI) instead of the Retail Prices Index (RPI) to calculate future increases. This is what the new scheme is going to do, and is partly what makes the new scheme affordable.
• provide certain increases on Guaranteed Minimum Pensions (GMPs).
After allocating enough money for these future annual increases, there was not enough money for the new scheme to be able to offer any more future annual increases. This meant that the new scheme could not provide increases to pensions once they are being paid to members, where those pensions were built up before 1997 – apart from the increases required by law on GMPs built up after 1988.
The PPF does not pay any annual increases to pensions in payment built up before 1997. This was also relevant to our decision about what increases the new scheme would pay.
The new scheme might be able to give members extra money in certain circumstances. This is summarised in your information pack and in the question ‘When might the new scheme give extra money to members?’. If and when the new scheme is able to provide extra money, priority will be given to members with pensions built up before 1997.
These questions only apply to pensioner members who are getting the ‘high’ part of their ‘high/low’ pension, also known as a bridging, 11/8, 11/4 or income-levelling pension.
A high/low pension is also known as a bridging, 11/8, 11/4 or income-levelling pension. It’s an option some members chose when they started taking their pension. It gives you a higher pension than you would otherwise get, until you reach a certain age. That’s usually 65 or your State Pension Age. At that point, it gives you a lower pension than you would otherwise get. People usually choose this option to smooth out their total income, so that it’s the same before and after their State Pension starts.
Your option pack uses your ‘high’ figure because that is what your pension will be on 29 March 2018, when the current scheme starts moving into the PPF and the new scheme starts paying pensions. See the next question for more.
The rules about how the Pension Protection Fund (PPF) treats high/low pensions changed on 24 February 2018. As a result, the PPF now steps down high/low pensions, usually at your State Pension Age, in a similar way to the current scheme and the new scheme.
However, all members under normal retirement age who are moving into the PPF will see their benefits reduced after 29 March 2018. They will reduce by 10% – or more if a cap applies. When you reach your stepdown date in the PPF, your benefits will then reduce to a lower level. The PPF’s scheme administrators will calculate exactly how this stepdown will work for you, and should be able to let you know once they have that information.
You’re now in the ‘low’ part of your high/low pension, probably because you have passed 65 or your State Pension Age and are now getting your State Pension. See the next question for more.
The fact that you have a high/low pension doesn’t affect your choice. That’s because when the change happens to the scheme – on 29 March 2018, you will already be getting your ‘low’ pension. That’s the pension that you would be due to get for the rest of your life. So what you need to think about is how that pension would be affected by switching to the new scheme compared to moving into the PPF. Your option pack shows you the main things to think about to help you decide which is best for you.
That will happen when you are 65 or at your State Pension Age. The Trustee will have told you exactly when it will happen, when you first started getting your pension. You can find your State Pension Age here.
When you applied to get a high/low pension, the Trustee will have told you what happens when your pension drops to the low level. We don’t have that information here. The amount you actually get will partly depend on what happens to inflation up to that date.
We are writing to all affected members about the change to the PPF rules that affects high/low pensions.
If your State Pension Age has changed since you started your high/low pension, the Trustee might have changed the age when your pension drops down to the low rate. The Trustee will have told you if they did this. Otherwise, your pension will drop to the low rate at the age you were told originally. This is usually 65 or your State Pension Age.
No. Whatever happens, you won’t have to pay back any money. You might think of your ‘low’ pension as ‘paying back money’ for when you had a higher pension. But what actually happens is that you get a higher pension to start with, and then you get a lower pension. You don’t pay anything back.
The new scheme and the PPF offer lower increases than the current scheme, though the new scheme’s increases are generally higher than the PPF’s. So you won’t get the same yearly increases that you have been getting. Your option pack shows the increases that the two options offer.
Yes. The new rules came into effect on 24 February 2018. See ‘Are high/low pensioners treated differently in the new scheme and PPF?’
These questions only apply to members who are not yet taking their pension and are more than a year under their normal retirement age (usually 65). Other members cannot transfer out.
A transfer value quote is valid for a ‘guarantee period’ which is normally up to three months. However, if you have a quote that is due to expire between 1 December 2017 and 25 January 2018, we have extended it so it is valid until 26 January 2018. We have written to affected members with more details.
This is as far as we can possibly extend your quote. We can’t extend it any further, because at the end of January, the actuaries will start calculating how the assets will be split between the new scheme and the PPF. If you already have a transfer quote that will still be valid beyond 26 January, you can still use it.
If you do decide to transfer out, you need to complete the necessary forms and return them to us as soon as possible, and before your quote expires.
To transfer out of the current scheme, we estimate that you need to get all your completed paperwork to us by 16 February. This is to give us enough time to process your completed paperwork and pay your transfer by 28 March, but it isn’t guaranteed.
If you don’t leave enough time for us to do this, you might not be able to transfer out, or might not get the transfer value that you expect. See ‘What happens if my transfer cannot be completed by 28 March 2018?’.
If you already have a transfer value quote and you have questions about what happens next, contact the Pensions Office’s Transfer Helpline on 0330 440 0850 or email pension.transfers@tatasteel.com.
You can’t transfer out using a transfer quote that’s expired, or past its ‘guarantee period’ – which is normally three months.
You can only have one transfer value quote every 12 months. However, we understand that some members with current quotes wanted to wait to receive their information packs before taking advice and making their decision about transferring out. These members are finding it hard to do this before current quotes are due to expire. So, if you have a quote that is due to expire between 1 December 2017 and 25 January 2018, we have now extended it so it is valid until 26 January 2018. We are writing to affected members with more details.
If you are thinking of transferring out, you should still choose between the new scheme and the Pension Protection Fund (PPF). To do this, start by asking yourself which option you would choose if you decided not to transfer out.
This is because, if you end up deciding not to transfer out, you will either move into the PPF or switch to the new scheme. So you want to make sure you get the right option for you. If you do complete the transfer process and we transfer your money by 28 March 2018, it won’t matter which option you chose.
Please bear in mind that if you choose the PPF and don’t get your completed transfer paperwork to us by 28 March 2018, your transfer request will expire and you won’t be able to transfer out in the future. And please bear in mind that you must submit your paperwork before your transfer quote expires.
To complete your transfer by 28 March 2018, we estimate that you’d need to get your completed paperwork to us by 16 February 2018. This is to allow enough time for the Pensions Office to process your paperwork and pay your transfer to your chosen pension arrangement, by 28 March 2018.
If you miss this deadline, you might only be able to take a lower transfer value, or might not be able to transfer out at all.
• If you’re switching to the new scheme you won’t be able to carry on with transferring out of the current scheme. But you may still be able to transfer out of the new scheme at a later date. You’d need to start the process again by requesting a new transfer value quote from the new scheme. When you ask for your transfer value to be paid, you need to be at least 12 months younger than your normal retirement age. Your normal retirement age is usually your 65th birthday. Your transfer value in the new scheme is likely to be lower than your transfer value in the current scheme, to reflect the fact that the overall benefits, including possible future increases, could be lower in the new scheme.
• If you’re moving into the PPF you can still go ahead with a transfer, provided that your completed paperwork reached the Pensions Office by 28 March 2018. However, the transfer value you get might be reduced. This is because the transfer value payable in these circumstances cannot be more than the cost of providing the compensation payable to you by the PPF. This might be lower than the transfer quote from the current scheme. If you don’t want to go ahead with that transfer, you won’t have any further opportunity to transfer out. If you didn’t return your transfer paperwork by 29 March 2018, then you won’t be able to transfer out at all.
Remember, if you want to transfer out of the current scheme, the deadline for getting your completed paperwork to us is not 29 March 2018, but 16 February 2018 at the latest. And please bear in mind that you must have submitted your paperwork before your transfer quote expires.
Beware of scammers who could try and con you out of your pension.
Scammers have been trying to contact British Steel Pension Scheme members by phone, text message and email. They are approaching people in person, and even placing adverts in the local press and on the internet. They’ve even been copying British Steel Pension Scheme colours and designs.
Scammers start by offering a ‘pension review’ or a ‘one-off investment opportunity’. Ultimately, this ‘offer’ will depend on you cashing in your savings and transferring them to a third party. As soon as this happens you could lose all or some of your money – so you really can’t be too careful.
What you should watch out for
• Any contact about your pension from a person or a company you haven’t heard of
• Offers to help you access your money before the age of 55, or in an amount greater than is legally allowed
• Salesmen with investment ‘opportunities’ that they describe as ‘one-off’, ‘unique’ or ‘time-limited’
• Phone calls or emails from people who claim to work for your bank or for a government department
If you’re not sure
• Don’t sign anything or transfer any money without speaking to the Pensions Advisory Service on 0300 123 1047
• If you think you’ve already fallen victim to a scam, call Action Fraud on 0300 123 2040
To find out more, read the Pensions Regulator’s booklet on pensions scams and how to avoid them .
Transfer value quotes are valid for a ‘guarantee period’ which is normally up to three months. However, if you have a quote that is due to expire between 1 December 2017 and 25 January 2018, we have extended it so it is valid until 26 January 2018. We are writing to affected members with more details.
Transferring out means swapping your future benefits in the scheme for a one-off sum of money that is transferred into a different pension arrangement. Transferring out can give some members more choice about how and when they use their pension benefits. Legally, it is only an option for non-pensioners who are more than a year under their normal retirement age (usually 65).
The sum of money that you could transfer out is known as a ‘cash equivalent transfer value’, ‘CETV’ or ‘transfer value’. To find out what the transfer value of your benefits would be, you ask the Pensions Office for a transfer value quote. This quote is valid for a ‘guarantee period’, which is normally up to three months. However, if you have a quote that is due to expire between 1 December 2017 and 25 January 2018, we have extended it so it is valid until 26 January 2018. We are writing to affected members with more details.
You should think carefully before transferring out. You would be giving up guaranteed future pension income in return for income that might not be guaranteed and could vary depending on how you manage it. You should take independent financial advice – and legally must do so if your transfer value is over £30,000. You should be very careful to avoid scammers and unscrupulous financial advisers. You can find an adviser from unbiased.co.uk. Make sure they’re authorised by the Financial Conduct Authority with permission to advise on pension transfers. You can check this by looking up the adviser at www.fca.org.uk.
Even though transfer values can seem very large, transferring out is unlikely to give you as much total pension income as either the PPF or the new scheme, on a like-for-like basis.
If you are thinking about transferring out your Scheme benefits but have not yet requested a transfer value quotation you should contact the Pensions Office by 11 December 2017 at the very latest. This is to allow time for:
1. Your quote to arrive (up to three months, though we aim to do this in one month)
2. Finding an independent financial adviser and taking their advice
3. Finding and joining a new pension arrangement that can take your transfer
4. You, your financial adviser and the provider of your new pension arrangement completing and returning all the necessary forms to the Pensions Office – by 16 February 2018.
For transfer quotes only, you can ring the Pensions Office on 0330 440 0850 or e-mail pension.transfers@tatasteel.com.
If you complete all these steps by 16 February 2018, we estimate that the Pensions Office will be able to process and pay your transfer instruction by 28 March 2018. However, we can’t guarantee that the Pensions Office will be able to do this. So please give them as much time as possible by completing the steps above as soon as you can.
See also, ‘What happens if my transfer cannot be completed by 28 March 2018?’
In the meantime, you should still choose between the new scheme and the PPF, in case you decide not to transfer out.
Click on it to have a closer look.
If you haven’t yet sent your completed transfer documents to the Pensions Office, you don’t have to do anything else. We won’t make any transfer payments before we’ve got all the appropriate documents from you.
If you have already sent your completed transfer documents to the Pensions Office, you have a right to withdraw your application to take a transfer payment, by formal notice to the Trustee. You’ll need to complete and send us a ‘Transfer Withdrawal Notice’, which you can download here.
Alternatively, you can phone the Pensions Office’s Transfer Helpline on 0330 440 0850 to ask for a form or email pension.transfers@tatasteel.com
If the Trustee has already entered into arrangements with a third party, like the managers of the scheme you chose to transfer into, it will be too late to withdraw your application. If that’s the case, we won’t be able to accept your Transfer Withdrawal Notice.
Guaranteed Minimum Pension (GMP) is a minimum pension income that some members are entitled to get from a certain age.
Between 1978 and 1997, pension schemes could contract out of the State Earnings-Related Pension Scheme (SERPS). The British Steel Pension Scheme was contracted-out. This meant that the members and employers paid reduced National Insurance Contributions.
It also meant that those members are entitled to a pension from the current scheme at least equal to the GMP from age 60 for women or 65 for men.
The scheme must also pay a GMP to any spouse or civil partner after the member’s death.
The rules for calculating the amount of GMP are complicated. Subjects they cover include:
ο the amount of GMP earned in each year of contracted-out employment, which is different for men and women
ο how a GMP must be increased after a member has left the scheme until they reach age 60 or age 65
ο how the GMP can be started later than age 60 or age 65 but not earlier
ο how the GMP part of a pension must be increased each year after it starts – only the GMP built up from 1988 needs to be increased.
A member is not allowed to swap (or ‘commute’) part of their pension for a cash sum if the pension from the scheme would then be less than their Guaranteed Minimum Pension (GMP).
If you have a GMP in the current scheme and switch to the new scheme, you will keep the same GMP in the new scheme. But if you move into the PPF, your benefits will be based on the total amounts of your current scheme benefits on 29 March 2018, including the amount of any GMP at that time – your PPF benefits won’t actually include a GMP.
With GMP, the differences between the new scheme and the PPF include:
1. If you’re not yet receiving a pension and you have a GMP that is a large part of your pension:
(a) this could restrict your ability to take your pension early if you switch to the new scheme, or if you take your pension from the current scheme before it has completed its move into the PPF
(b) this could limit the amount of tax-free cash you can take if you switch to the new scheme, or if you take your pension from the current scheme before it has completed its move into the PPF.
The restriction in (a) could mean that, if you switch to the new scheme and take your pension early, it would start at a much reduced amount. That’s because it will have to increase to the amount of your GMP when you reach age 60 for women or 65 for men. This is called a ‘GMP step-up’. But if you moved into the PPF, that restriction would not apply because the PPF benefits will not include a GMP.
2. Once your GMP is being paid at or after age 60 (for women) or 65 (for men), the new scheme will pay yearly increases on the GMP you’ve built up between 1988 and 1997. The PPF won’t pay increases on any benefits that you built up before 1997, once you’re taking it.
3. If you are receiving a pension and have not yet reached age 60 if you’re a woman or 65 if you’re a man, you might be entitled to a GMP step-up when you reach that age. If so, you would still get a full GMP step-up in the new scheme but the position in the PPF would be different – see ’Will my pension still go up when my GMP starts?’.
This question might be relevant to you if you:
ο are already receiving a pension from the current scheme
ο will be under age 60 (if you’re a woman) or 65 (if you’re a man) on 29 March 2018, and
ο you have a Guaranteed Minimum Pension (GMP) from that age.
The current scheme must make sure that your pension at age 60 or 65 (as appropriate) is at least equal to your GMP. As a result, if your pension is lower than your GMP when you get to that age, the current scheme would give your pension a one-off increase. This increase is called a ‘GMP step-up’.
If you switch to the new scheme, you would still get a full GMP step-up if that was necessary. The PPF doesn’t pay anything for any GMP step-up if you’re a man. If you’re a woman, the PPF would pay 90% of the expected GMP step-up. It would be payable from age 60 but you could ask for it to be paid early. If you did that, the amount would be reduced.
As explained in ’What is a Guaranteed Minimum Pension (GMP)?’, members who built up pension between 1978 and 1997 normally have a GMP because they were contracted out of the State Earnings Related Pension Scheme (SERPS). The way GMPs are calculated and when they are payable is set out in legislation. The GMP for a man is smaller than for a woman of the same age and with the same service and pay. The man’s GMP is payable from age 65 but the woman’s is payable from age 60. These differences reflect similar differences in SERPS.
Different GMPs can result in different benefits being paid from the current scheme.
There are questions about whether it is lawful in a scheme like the current scheme for pensions built up between 17 May 1990 and 5 April 1997 to be different for men and women just because they have different GMPs. These are questions that have not yet been decided by the European Court of Justice or by a UK court.
The differences in the current scheme are not normally as significant as they are in other schemes. That’s because the current scheme normally increases the whole of the pension built up before 2006 in line with inflation during any period between the member leaving the scheme and the pension being paid.
However, when a pension built up between 1990 and 1997 is being paid to a member after age 60 (for women) or 65 (for men) or to a spouse or civil partner, the increases to the GMP part are capped at 3% a year. The increases to the rest of that pension are not capped in the current scheme. The equal treatment rule that was put into UK law in 1995 had an exception for this but it has not been kept up to date with recent changes to the State pension. The new scheme will not pay increases on pension earned before 1997 except for the GMP earned after 1988.
Like most schemes, the current scheme has made no attempt to equalise differences caused by unequal GMPs. We have been waiting for the law to be made clear. The Government has been consulting about this for several years. There is now a case going to the High Court about the Lloyds Bank pension schemes which is all about this.
We have agreed with the Company (Tata Steel UK) that nothing will be done about this in the new scheme until the law is clear.
As explained in ’’How might GMP affect my choice?’, if you move into the Pension Protection Fund (PPF), the benefits it pays will not include a GMP. However, before calculating those benefits, the PPF will make sure that the pension you built up after 1990 in the current scheme complies with the equal treatment rule. If the amount of that pension on 29 March 2018 would be more if you were of the opposite sex, your PPF benefits will be increased accordingly. This would be a one-off increase and it would cover any difference caused by GMPs. The amount of this increase is likely to be quite small.
If you switch to the new scheme, you will still have the same GMP, including future yearly increases. When the law is made clear, you might then get extra pension that is more or less than any one-off increase that the PPF would have made.
17 January 2018
Your benefits under the current British Steel Pension Scheme are governed by its trust deed and rules. If you switch to the New British Steel Pension Scheme, your benefits will be governed by its trust deed and rules. If you move to the Pension Protection Fund, your benefits will be governed by the law that relates to the PPF. Your personal information pack and this website only summarise the main information about choosing your option.
© B.S. Pension Fund Trustee Limited 2017 All Rights Reserved.
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