More than 1,000 members of the British Steel Pension Scheme (BSPS) will receive compensation of £49m after being mis-advised to transfer out of the defined benefit scheme.
The Financial Conduct Authority confirmed the redress due, saying members will be given details of individual payments by February. However, the total to be paid out is significantly lower than the £71.2m initially outlined by the regulator earlier this year. This is due to a 300 fewer members qualifying for redress alongside improvements in annuity rates.
As a result the average payment will be in the region of £45,000.
This compensation should be paid by the advisory firm that provided the unsuitable advice. Members who have been misadvised by a company that has subsequently gone out of business are being urged to contact the Financial Services Compensation Scheme.
AJ Bell head of retirement policy Tom Selby says: “Today’s news will undoubtedly come as a huge relief for those affected by the British Steel pension saga and brings those who received bad advice a step closer to receiving redress.
“Anyone who was misadvised to transfer out of their defined benefit British Steel pension scheme now has certainty over how the plan to pay their money back will work and when they should get their redress.”
He adds that the total redress figure is over £20m less than previous FCA forecasts this will mean the average payment has fallen from £60,000 to £45,000. Selby says: “While this makes sense, some will undoubtedly be disappointed at this outcome.
He adds: “While the vast majority of advisers in the UK provide a hugely valuable service to their clients, the few bad apples who gave bad advice to British Steel members have sadly tarnished the reputation of the entire sector.
“Aside from the direct impact on members who were poorly advised, the scandal will also inevitably harm trust in retirement saving more generally.
“Sadly, scandals such as Robert Maxwell at the Daily Mirror, Equitable Life and now British Steel tend to live long in the memory. As a result, the wider pensions industry will now need to redouble efforts to ensure people aren’t put off saving for retirement altogether.”