UK Steel Pensions Plan Poses ‘Significant Risks’
Experts warn the UK government that the plan to cut the level of pension payments to retirees of Tata Steel UK’s plants would pose significant risks.
The Pension Protection Fund said the majority of members would receive roughly the same as they would in the PPF and the minority would only be worse off.
“The number that are worse off could grow, depending on the early retirement and lump sum commutation factors the scheme intends to use,” said the PPF.
“More specifically the government should seek to prevent bespoke arrangements for one scheme being underwritten by PPF members and levy payers.
“Although the government (including in the consultation document) has been at pains to stress the unique circumstances surrounding BSPS we would nevertheless expect other employers or industries to seek similar arrangements to reduce their pension scheme liabilities,” it added.
According to former Pensions Minister Steve Webb:
“For an arms-length public body to say that the government’s plans involve ‘significant risks for relatively limited gains’ is very strong language and shows the dangers of going down this route.”
The PPF’s warnings said the risks would allow the scheme to step outside its current framework, which would force it to enter the PPF .