FAQs

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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.

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.

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.

Please see the answer to FAQ 3.

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

However, you might want to take your benefits in a different form or at a different time. For example, you might want to exchange some of your pension income for a cash lump sum or take early retirement. The terms for doing this with an insurer might be different to those that the PPF currently uses or may use in future.

Choosing when and how to take your benefits 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.

Choosing when and how to take your benefits 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.

It is not possible to directly compare what you might get from the PPF or an insurer in terms of early retirement and tax-free cash. This is because, while the PPF requires all schemes it is assessing (or has accepted) to work out early retirement pensions and tax-free cash in the same way, insurers work these out in different ways. Also, over time, insurers and the PPF both change how they work out these figures. At the moment, the Scheme is being assessed by the PPF. We don’t yet know if the Scheme will enter the PPF or if we will secure a buy-out instead. See FAQ 5 for more about this.

You can ask for a retirement quotation from your Scheme administrators, Barnett Waddingham.

See FAQ 6.

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.

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.

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

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.

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.

In the same way as a pension paid by the PPF, pension income from an insurance company wouldn't be affected by changes in investment markets. As part of a buy-out, the insurance company would be paid a fixed amount of money from the Scheme to provide all future pensions and benefits payable to members.

Under a buy-out, the insurance company would take over the responsibility for paying your benefits directly to you for life, along with any relevant death benefits such as a pension for your spouse.

See FAQ 11 for more information on the regulation and security of the insurance companies being considered.

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