The Legal 500

Twitter Logo Youtube Circle Icon LinkedIn Icon

Pitmans LLP

Work +44 345 222 9222
Fax +44 118 958 5097

Show all Press releases

Responses to the Government consultation on restructuring the British Steel Pension Scheme

July 2016

The British Steel scheme trustees and PPF have responded to the Government consultation regarding the restructuring of the British Steel Pension Scheme.

On 26 May 2016 the Department for Work and Pensions (“DWP”) published a consultation paper about the options for restructuring the British Steel Pension Scheme (“Scheme”).

The consultation period ended on 23 June 2016 and the results are currently being analysed.

For further information regarding the Scheme and the contents of the consultation paper, see our previous summary.
Trustees’ Opinion

The Trustees strongly support the proposal to disapply the restrictions contained in section 67 of the Pensions Act 1995; this was the third of the four options proposed by the government in their consultation paper.

By disapplying section 67, the Trustees would be permitted to make a detrimental modification without member consent, and in particular they could change the basis pensions in payment are indexed and deferred pensions are revalued for future periods, using CPI instead of RPI.

The Trustees believe this would enable the Scheme to be financially self-sufficient and would ultimately keep the Scheme out of the PPF indefinitely. The Scheme is about two-thirds the size of the PPF (based on the PPF’s latest accounts) and although the Scheme would not be able to buy annuities equivalent to the PPF, they do have sufficient assets to provide better benefits than the PPF if it was to continue operating on a stand-alone basis.

The Trustees would also ensure that any surplus funds generated would be used to either reinstate pension increases or to improve the security of benefits, which would not happen if the Scheme went into the PPF.

They forecast that the members would either receive the same or better benefits via this route than they would if the Scheme was to enter the PPF so it would be in the best interests of the members and PPF levy payers.

In the alternative, if the Scheme was to enter the PPF, the Trustees say this would involve benefit reductions of at least 10% for 58,000 below 65 members and for all members, reductions in their future pension increases.
PPF’s Opinion

The PPF believe the proposals which would see the reduction in benefit levels, in their current format, present “significant risks for relatively limited gains”.

In contrast to the Trustee’s assessment, the PPF believing the “majority of members would receive roughly the same as they would in the PPF and a minority would be worse off. The numbers that are worse off could grow depending on the early retirement and lump sum commutation factors the scheme intends to use”.

In addition to being potentially detrimental to the members, the PPF also highlight that if the Scheme is allowed to continue with reduced benefits, short of a suitable sponsor of the scheme being found which appears unlikely, any future risk would be underwritten by PPF levy payers; the longer the Scheme continues outside of the PPF, the more members who will reach retirement age and therefore the greater amount of PPF compensation will be due.

As a result, the PPF suggest if either of these proposals is implemented then either of the following limitations should be considered:

    the Scheme should be made ineligible for future PPF protection; or
    appropriate restrictions to protect PPF levy payers should be considered such as:

    controls over investment strategies;
    triggers for PPF entry to prevent a significant deficit accumulating;
    transferring pensioner members to the PPF, leaving a much smaller residual scheme continuing outside the PPF;
    provisions which allow the PPF to recover the costs incurred which would not have been incurred had the Scheme entered the PPF.

Ultimately, rather than the third or fourth proposal, the PPF favours the government’s first proposal, namely using the existing regulatory mechanisms with the Scheme entering a PPF assessment period; this is exactly the kind of situation the PPF is intended to assist with, it is tried and tested and importantly balances the protection to members with the impact on levy payers. Although the scale of the Scheme is significant, “a claim on the PPF would be manageable without – in itself- triggering an increase in the PPF levy”.

For more information, please do not hestitate to contact Symon.

Legal Developments in the UK

Legal Developments and updates from the leading lawyers in each jurisdiction. To contribute, send an email request to
  • Gulbenkian Andonain discuss NEW Tier 1 Start-Up Visa and the NEW Tier 1 Innovator Visa

    The document entitled "Statement of Changes to Immigration Rules" which was released by the House of Commons on the 7th March 2019, outlined and advised us on a number of changes that will come into place that will affect the Tier 1 Investor Visa amongst other visa programmes and schemes. The latest article on our website discusses both of these new UK business visa routes. Our immigration lawyers London are already up to date on all of the required information for both the NEW Tier 1 Start-Up Visa and the NEW Tier 1 Innovator Visa .
  • Upcoming Changes to the UK Tier 1 Investor Visa

    According to the new document from the House of Commons on March 7th 2019 titled “Statement of Changes to Immigration Rules”, a number of changes will come into place that affecting the Tier 1 UK Investor Visa programme amongst other visa programmes and schemes.
  • Brexit and non-EU Immigration

    There is no doubt that the UK has to date benefited immensely from visa-free EU immigration to the extent that visa conditions and caps on non-EU migrant have undermined and overshadowed the ability of this group to play a prominent role in British industry and commerce and in its expanding and overburdened NHS service. It is the view of  Gulbenkian Andonian  however, that after  Brexit, there should be a noticeable change in those skilled non-EU migrants contributing to British society in a meaningful way. 
  • Gulbenkian Andonian Solicitors discuss Post Brexit scenarios - EU Nationals and Salient Immigration

    From 1 January 2021 everyone except for British and Irish citizens will be subject to immigration control in the UK.   Gulbenkian Andonian solicitors has already published an article on this topic of post- Brexit immigration and has discussed the case of EU nationals and family members after Brexit, you can find that article here as one of many in our blog .

    Tescoadmitted wrongdoing over its accounting scandal in order to obtain a deferredprosecution agreement and avoid a conviction. But with everyone charged overthe scandal having been cleared, Aziz Rahman examines whether the deferredprosecution agreement process needs revising.

    With Standard Bank having become the first organisation to conclude a DPA, Aziz Rahman explains why gaining one is only the start of the challenge.

    The sacking of Nissan’s high-profile chairman may have beenproof that nobody is infallible. But Nicola Sharp argues that it should also beseen as an indicator that no company can be considered safe from wrongdoing.
  • Applying for A Sole Representative Visa

    Regardless of the Brexit outcome, the United Kingdom will remain one of the world most powerful economies. With a market of 65 million people and close ties with Europe, many overseas-based organisations look to establishing a subsidiary or branch office in Britain.

    Aziz Rahman considers the Ericsson bribery investigation and outlines how best to respond if you are investigated by more than one law enforcement agency
  • Have Changes to The Spouse/Civil Partnership Minimum Income Threshold Made A Difference?

    The plight of those denied a UK Spouse/CivilPartnership Visa or a Spouse/Civil Partnership Visa extension continues to feature in the headlines.   In August 2018, the Guardian reported on one young woman, driven to attempt suicide after her fiancé, an Albanian national, was not permitted to enter the country.   The Home Office ruled Paige Smith, a British Citizen, did not meet the £18,600 income threshold.   It later transpired the Home Office lost a crucial payslip proving that Ms Smith met the criteria, a document the department had been sent four times by a Solicitor and Ms Smith’s MP.   The appeal Judge took ten minutes to rule the Visa should have been approved; however, the couple still had to wait two months for the Home Office to declare it would not appeal the decision.