UK roundup: British Steel, state pension age, Pensions Regulator [updated]

Members of three unions representing steelworkers have voted in favour of closing the British Steel Pension Scheme to future accrual.

The vote was the first step in what the scheme’s trustees hope is a restructuring of benefits in order to stay out of the Pension Protection Fund (PPF).

Roy Rickhuss, general secretary of the Community union, said: “This result provides a clear mandate from our members to move forward in our discussions with Tata and find a sustainable solution for the British Steel Pension Scheme.

“Steelworkers have taken a tough decision and have shown they are determined to safeguard jobs and secure the long-term future of steelmaking. Nobody wanted to be in this situation, but as we have always said, it is vital that we now work together to protect the benefits already accrued and prevent the BSPS from free-falling into the PPF.”

In other news, researchers have claimed a post-Brexit fall in immigration could require a significant increase in the UK’s state pension age for younger workers.

Consultancy firm Hymans Robertson calculated that workers under the age of 40 could see their state pension age increase by 18 months if the UK’s exit from the European Union led to a decline in non-UK workers arriving in the country.

Currently, the Office for Budget Responsibility (OBR) estimates that there are 305 pensioners for every 1,000 workers. This is expected to reach 360 by 2050 under current (pre-referendum) estimations.

Jon Hatchett, partner and head of corporate consulting at Hymans Robertson, said: “If migration does fall, so too will the number of workers to support the increasing numbers of people of pensionable age. Undoubtedly this will put pressure on the affordability of the state pension, and as a result the age at which you can claim it.”

Starting in December next year, the government will begin gradually raising the age at which men and women can claim the state pension, with a view to reaching 67 by 2028.

Meanwhile, the Pensions Regulator (TPR) and the Pensions and Lifetime Savings Association (PLSA) have called for a range of measures to protect individual savers from pension scams.

Since former chancellor George Osborne scrapped the requirement for all retirees to buy an annuity with their defined contribution pensions, there has been a surge in scams such as so-called ‘pension liberation’ fraud. The government is now consulting on how best to protect consumers from being swindled.

Andrew Warwick-Thompson, executive director at TPR, said unsolicited calls should be banned outright, as should email and text message campaigns.

“An outright ban on pension cold calls would send a powerful message to all pension savers – ‘A cold call about your pension will be from a criminal. Just hang up!’” he wrote in a blog post.

Warwick-Thompson also recommended limiting the types of schemes that savers can transfer their money to.

“I favour a restriction of a member’s right to a statutory transfer to transfer requests to either an authorised master trust or an FCA regulated product,” he said.

This would include a ban on transfers to small self-administered schemes (SSAS), which are largely unregulated and often have fewer than 10 members.

The PLSA largely agreed with Warwick-Thompson. It proposed an authorisation regime for schemes with fewer than 100 members requiring them to appoint an independent professional trustee.

Elsewhere, the Northern Ireland Local Government Officers’ Superannuation Committee has signed the “Global Statement on Investor Obligations and Duties” set out by the United Nations’ (UN) Principles for Responsible Investment and the UN Environment Programme’s Finance Initiative. It is also backed by Generation Investment Management, an initiative launched by former US vice president Al Gore.

The £5.8bn (€6.8bn) fund for local government workers joins 116 other investor signatories from 18 countries, including AP3 and AP4 from Sweden, Germany’s BVK, and the New Zealand Superannuation fund.

On the corporate side, the PPF reported that the combined deficit of UK defined benefit schemes fell to £196.5bn at the end of January, from £223.9bn at the end of December 2016.

Compared with a year ago, the aggregate funding ratio has improved from 82% to 88%. This includes a change to the PPF’s calculations, which came into effect in December.

Finally, members of workers’ union Unite have voted in favour of reforms to the pension fund for employees of the Isle of Man government.

Members of the Government Unified Pension Scheme, established in 2011, will see contributions increase by 2.5 percentage points to 7.5%, while benefits will be reduced by 6%. The changes will take effect from March 1.