British Steel Final Determinations

The Final Determinations in the four lead cases have now been published on our website:

• PO-16970 (Mr A)
• PO-18982 (Mr G)
• PO-20199 (Mr S)
• PO-18762 (Mr D)

After extensive investigation, the Ombudsman has not upheld these complaints.  We appreciate that members will be disappointed with this outcome.

However, this has been a long and complicated matter and our investigations have been in-depth and wide ranging giving 229 members the opportunity to comment individually. Submitted complaints to The Pensions Ombudsman concerned the Trustee’s communications with members in relation to the Old British Steel Pension Scheme’s (OBSPS) entry into the PPF; and decisions that the Trustee made regarding the calculation basis of cash equivalent transfer values (CETVs) and early retirement factors (ERFs) under the OBSPS.

Summary

During the period of uncertainty regarding the OBSPS’ future, the Trustee undertook a “de-risking” exercise in respect of the Scheme’s investments.  As a consequence, the calculation methodology behind CETVs and ERFs was changed on 1 April 2017, with the result that members who requested a transfer value or retired early from the OBSPS after that date, received significantly higher benefits than those who had already transferred out or taken early retirement.

Members have complained that: the Trustee’s communications concerning the OBSPS’ future scared them into transferring out or taking early retirement sooner than they might otherwise have done; and that the Trustee should have changed the calculation basis earlier and been more open with members about this.

The circumstances of each of the four lead cases differ slightly, in terms of: whether the member took a CETV; when, in relation to the change of calculation basis the member took their CETV; or whether the member retired early.

The Determinations outline the scope of, and the limits to, our investigation, together with detailed analysis of the evidence and the law which led to these conclusions.

The Ombudsman’s decision is based on the following findings:

• the Trustee’s communications concerning the OBSPS’ future were not misleading (and were not intended by the Trustee to be so) and did not amount to scaremongering;
• setting ERFs and/or CETV factors is a matter for the Trustee, in respect of which the Trustee obtained and considered actuarial advice;
• the Trustee obtained and considered appropriate advice from suitable parties in order to reach its decisions in respect of: the OBSPS and its future; the OBSPS’ statement of investment principles; and changes to the CETV methodology and ERFs; and
• the Trustee acted reasonably in using the ERFs and/or CETV calculation methodology that applied at the relevant time; and subsequent changes to the methodology should not be applied retrospectively.

What happens next?

Copies of the relevant final Determination have been shared with all applicants whose complaint is linked to a lead case (Group Applicants). Group Applicants now have the opportunity to present reasons as to why their case, or any element of it, is substantially different. If, under review, we agree that any element of their case is substantially different, that element will be investigated on an individual basis.

The Determinations are final and binding, subject to appeal to the High Court on a point of law.