Yet again the financial advice industry is excelling itself as a source of sleaze and spivvery.
“Advisers” have descended like wolves on British Steel workers at Port Talbot and Scunthorpe, who have been left on the horns of a nasty dilemma as a result of their industry’s troubles.
As part of a deal to keep their works open Tata, the owner, is offloading the British Steel Pension Scheme into the Pension Protection Fund (PPF), which will lead to markedly less benefits for scheme members.
There are alternatives: transfer funds into a new Tata scheme, which may or may not pay more, or opt for a private scheme. But how to decide which? At least some of the “advisers” “factory gating” workers don’t give a hoot. They just think cha-ching!
To be fair, there have been efforts by reputable parts of the industry to combat the misdeeds of the shiny suited pension thieves who are dragging their industry through the mud again.
But the affair highlights a wider, and far more disturbing point: A matter of months after a huge scandal erupted over the BHS pension scheme here we are in the midst of another major pension scandal.
Another group of workers who had promises made to them have had them broken.
The best, or rather worst, of it is that we will very likely be here again, and perhaps quite soon.
According to the latest figures released by the PPF, Britain’s 5,794 final salary pension schemes have just 91.2 per cent of the funds they need to meet the promises made to their members.
Just under a third are in surplus, so many of the 4,000 or so individual schemes running short look an awful lot worse than that.
If the employers that sponsor those schemes hit the rocks so do their members’ retirements.
The PPF offers a lifeboat, and the fact that it is there is a thoroughly good thing. But there are limits. It only provides 90 per cent of what scheme members will have been promised up front and even that is subject to a cap. Future benefits are also usually much less generous than the original scheme.
Sponsoring employers have been told to plug the holes in their pensions, but it’s going to take a long time to get there, about 7.5 years according to the PPF's numbers.
The level of surplus schemes are targeting, meanwhile, has declined a bit.
British Steel is just be a starter for the wolves snapping at pension carcasses. They will get their chance at a second helping, and a third, and a fourth and a fifth course.
Needless to say, the executives who run employers with deficit wracked pension schemes rarely suffer along with the workers they let down when their decisions lead those employers on to the rocks.
They usually have their own generous bespoke arrangements and pay offs to cushion them too. They also have lobbyists who urge ministers and watchdogs not to push too hard to get this disgraceful situation fixed too quickly. Think of our finances! Think of our bonuses!
The PPFs figures do rather show that those lobbyists are being heard. Such is life in Theresa May’s country that "works for everyone".
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