FAQs

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1. Why might a buy-out be happening?

A buy-out might be possible because it is expected to cost less than originally anticipated to pay all members’ and dependants’ benefits at Pension Protection Fund (PPF) levels, now and in the future. The reasons for this include that more members had died, and fewer members were married, than expected when the Scheme started being assessed for the PPF. The PPF is a safety net that the government set up to look after schemes like ours that no longer have an employer to support them. The improved funding means that the Scheme might be able to secure a buy-out with an insurance company, instead of having benefits paid by the PPF. We are legally obliged to explore whether this is possible, because the PPF is intended as a safety net only for schemes that have no other options because of their poor funding positions.

2. When will the buy-out happen?

At the moment we think that, if we can secure a buy-out, it will be complete by the end of 2021. Securing a buy-out is a complex process and the timetable might change. We will give you more information once it becomes available.

3. I’m receiving a pension from the Scheme. Will I be better off?

If you are already receiving a pension from the Scheme, a buy-out would mean you get the same or better than you currently get.

4. My pension has been reduced or cut back. Will I be better off?

Please see the answer to question 3.

5. I’m not yet receiving a pension from the Scheme. Will I be better off?

If you are not receiving a pension, then under a buy-out the pension you are entitled to at your normal retirement age will be the same or better than if the Scheme entered the PPF.

If you want to take your benefits in a different form or at a different time, e.g. exchanging some of your pension for a cash lump sum or taking early retirement, then the terms of doing so may be different to those that the PPF currently uses or may use in future.

6. I’m thinking of retiring soon. What should I do?

At the moment, the Scheme is in PPF assessment. We don’t know if it will enter the PPF or if we will secure a buy-out instead. The PPF requires all schemes in PPF assessment (and those that have entered the PPF) to use the same approach to work out early retirement pensions and tax-free cash. Different insurers work these out in different ways. This means it is not possible to make a direct comparison at this time. Choosing when to retire is an individual decision that depends on your particular circumstances. We are not allowed to give you financial advice, so you might want to talk to an independent financial adviser about this.

7. Can I convert my benefits into cash?

At the moment, the Scheme Rules and overriding law only allow you to convert benefits into cash in certain circumstances. Your age and total pension savings (in the Scheme and elsewhere) are factors, and you must not have started to receive your pension. However, if we are able to secure a buy-out, it may be possible for more members with small benefits to convert their pension for a cash lump sum, including those who have already started to receive their pension. We will be investigating this option with insurers and, if this is possible for you, we will write to you about it.

8. Can I transfer out now?

No. This is not permitted either by the Scheme Rules or by the law. However, if we do secure a buy-out, the insurance company will have a transfer-out option.

9. Can people who transferred out join the Scheme again?

No. This is not permitted either by the Scheme Rules or by the law.

10. Will my benefits be more secure with an insurer or with the PPF?

Both the PPF and insurers offer a high degree of security. The PPF is in a strong financial position and has been protecting members since 2005. It is already responsible for 250,000 members in 1,000 transferred schemes. Insurers are amongst the world’s largest and most secure financial organisations. In a buy-out, you have a contract with them in which they guarantee to pay your benefits.

11. How secure are these insurers?

As part of our work to explore the possibility of a buy-out, we will look at the financial strength of any insurers we consider. However, these companies are all very secure and highly regulated.

All insurers that provide buy-outs are regulated by both the Financial Conduct Authority and the Prudential Regulation Authority (PRA). The PRA requires insurers to hold significant capital reserves in order to back the buy-outs and other insurance products they provide.

Insurance companies are covered by the Financial Services Compensation Scheme (FSCS), which can provide compensation of the pension amounts in full. The FSCS would pay this compensation directly to the individual policyholders.

12. Where can I find further information?

Find out more about buy-outs at The Pensions Advisory Service

Find out more about the Pension Protection Fund

We will write to you again once we have more information about what is happening next.

Get in touch

Need to update your personal details or have any questions about your benefits? Contact your Scheme administrators, Barnett Waddingham:

Call:

0333 566 0156

Email:

BSPSmembers@barnett-waddingham.co.uk

Write to us:

Old British Steel Pension Scheme
Barnett Waddingham LLP
Silver Springs House
2 Topaz Way
Birmingham Road
Bromsgrove
B61 0GD

New British Steel Pension Scheme member?

If you moved over to the new British Steel Pension Scheme in March 2018 you can find all the information about your scheme here: www.bspspensions.com