It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate Nick Smith on securing this important debate. I should also declare that I have a steel plant in my own constituency, although it is not as badly affected as those in Port Talbot.
About 40,000 members of the British Steel pension scheme, the Tata Steel retirement fund, had the choice to trade their guaranteed pensions for a cash lump sum and transfer to a riskier plan as the scheme was restructured. To date, there have been about 8,000 transfers worth about £2.8 billion. Last year, as transfers from the British Steel scheme ramped up, the Financial Conduct Authority intervened to halt the activities of advice firms because of concerns that dubious advisers, incentivised by commissions and high fees, were descending on steel towns, especially Port Talbot in Wales, and enticing BSPS members to transfer their pensions.
It is extremely alarming that we now know the role advisers played in persuading steel workers to move their savings into riskier schemes. To call them cowboys would be an insult to cowboys. Financial advisers persuaded hundreds of steelworkers to give up their guaranteed pensions before the FCA halted their activity, concerned that it was mis-selling. The Work and Pensions Committee report into the BSPS described how:
“Many BSPS members were shamelessly bamboozled into signing up to ongoing adviser fees and unsuitable funds characterised by high investment risk, high management charges and punitive exit fees.”
It is clear that there was widespread mis-selling to members of the BSPS. The FCA found from a sample of those members that nearly half had been given unsuitable advice or advice that was unclear.
In its findings, the review into those pensions transfers recommended that pension scheme trustees should compile a list of recommended advisers for pensions transfers. Indeed, it seems strange that that is not already the case. I know that unions such as Community and Unite have done their best, but it is a complicated set of circumstances in which people have been shamelessly robbed of their pension funds. It is right that scheme members should not be left out in the wilderness when it comes to advice on what to do with their retirement savings. There must be more clarity for scheme members, so that they are not lured in by dodgy and self-interested firms, as illustrated by Stephen Kinnock.
The Scottish National party is keen to support steel communities across Scotland. First and foremost, workers must be put at the heart of solutions to put pension funds on a sustainable footing. The SNP Scottish Government took urgent action to ensure that steel plants were attractive to potential investors, to save workers from losing out. An investment of almost £200,000 was made by the Scottish Government to keep key workers on standby to safeguard full manufacturing capability, ensuring that plants could get back up and running as quickly as possible. The Dalzell works in my Motherwell and Wishaw constituency was the prime beneficiary of that policy, which also helped to safeguard Clydebridge works in the neighbouring constituency of Rutherglen and Hamilton West.
When the UK Government were dealing with the matter of the British Steel pension scheme, my hon. Friend Neil Gray expressed concern to the then Secretary of State for Business, Innovation and Skills that workplace pensions and incentives to save must not be undermined by any deal. In Parliament, my SNP colleagues and I have expressed solidarity with the workers at those plants, and I must thank the all-party parliamentary group on steel and metal related industries, which has done outstanding work in that regard as well. Hon. Members should rest assured that we will continue to press the UK Government to take meaningful action on issues that threaten the viability of industrial premises across the UK and their workers. This entire episode reaffirms the need for an independent pensions and savings commission to put the pensions landscape on a sustainable footing.
People have a right to know and understand their pension savings. At the moment, the UK Government’s extremely complicated pensions and savings landscape—made all the more confusing through the introduction of pension freedoms and vehicles such as lifetime ISAs—is making it more likely that consumers will make the wrong choices for their circumstances.
The BSPS members were in an extremely difficult and vulnerable situation that was exploited by greedy firms to the detriment of normal working people, who deserve the retirement that was promised to them. I can speak personally of the difficulties of realising that the pension being looked forward to will not materialise, because it happened in my husband’s case. We were not in anything like extreme circumstances, but it was still a shock to us that the future we had been promised and were looking forward to did not happen.
The SNP has long called for the establishment of an independent pensions commission to ensure that employees’ savings are protected and a more progressive approach to fairer savings is considered as we move to a period where defined benefit schemes are becoming a thing of the past. Now that the UK Government are battling with the chaos caused by the Brexit vote, the need for such an independent commission is more important than ever. This also highlights that the Government’s initiatives to improve consumer support and pensions are playing catch-up. More action must be taken urgently.
The Government have dragged their heels on the introduction of the pension dashboard, but there is absolutely no reason why this needs to be dragged out. It certainly should not be watered down. Consumers need a unified dashboard that includes their state and private pensions. The SNP was broadly supportive of the creation of a new single financial guidance and claims body that would merge independent financial and pensions advice bodies and the Minister should update the House on the progress of the establishment of this body. Is it up and running? How can it be used to ensure that people in vulnerable circumstances, such as BSPS members, can be armed with the facts to be able to make the right choices for their retirement?
I again congratulate the hon. Members for Blaenau Gwent and for Aberavon on their outstanding work in this field. In the past, I have had dealings with the Financial Conduct Authority on pensions matters and with the financial ombudsman and have found them to be reactive, dilatory and unable and uncertain about how they can best help constituents who have been tricked and duped in terrible circumstances. The idea that a man, and it is nearly always men, who worked in a hard and sometimes dangerous job should end up being duped by financial advisers—to their complete detriment—and unable to look their families in the eye and say, “I made a mistake, I am sorry, but nothing can be done”, is unacceptable to everyone in this place.