My enquiry is on behalf of my mother who is 89 years of age, who has been in receipt of a spouse’s pension from British Steel since 1985.
As my mother is currently unwell, hence my enquiry on her behalf with regard to the decision that she needs to make and inform British Steel of by 22 December 2017.
I am unclear from ALL that I have read, which of the two options offered may be preferable.
Crunch decision: Tens of thousands of British Steel savers must tell the pension scheme their intentions by 22 December
Based on the following info contained with the British Steel Pension Scheme Your Options Pack (dated October 2017) my mother currently receives the following spouse’s pension from the British Steel Pension Scheme:
Guaranteed Minimum Pension built up between 1978 and 1988 – £111.36
Guaranteed Minimum Pension built up between 1988 and 1997 – £0.00
Excess pension over Guaranteed Minimum Pension built up before 1977 – £1335.12
Pension built up between 1997 and 2005 – £0.00
Pension built up after 2005 – £0.00
Total: £1446.48 a year. Years relate to 5 April.
On my mother’s behalf can I please request your considered opinion – am I correct to think that based on her personal info above the key consideration is which of the two options offered will provide her with the best pension increase in each year?
Both my mother and I are widows and struggle to identify which of the two options would potentially be her best option.
Tanya Jefferies, of This is Money, replies: Tens of thousands of British Steel savers must make a crunch decision about their pensions by 22 December.
Free helpline for British Steel savers
A dedicated helpline at 0207 932 9522 has been set up by The Pensions Advisory Service to assist scheme members.
Many have three options:
* Stay in the current scheme, which means moving automatically into the Pension Protection Fund
* Move to the new British Steel scheme – BSPS2
* Transfer to a private pension.
Because your mother is already drawing a pension from the BSPS, she can only choose between the first two options. We have covered the details and some of the things people need to take into consideration here and here.
But everybody’s position is different, so you need to speak to an expert about your mother’s individual case.
A free dedicated helpline has been set up by The Pensions Advisory Service to assist scheme members, many of whom are understood to have taken no action as yet. We asked the boss of TPAS to answer your question.
Michelle Cracknell: The new BSPS2 may be able to give extra money to members in the future, under certain conditions
Michelle Cracknell, chief executive of TPAS, replies: It is really important that all British Steel Pension Scheme members make a choice before 22 December 2017. The choice will depend on personal circumstances.
Members who are in receipt of a pension will get the same pension under both the PPF (option 1) or BSPS2 (option 2).
Looking at the split of your mother’s pension, the increases to the pension in payment are the same. However, the new BSPS2 may be able to give extra money to members in the future if:
* Funding levels in 2021 are higher than expected;
* Proceeds arise from the scheme’s shares in Tata Steel UK; and/or
* There are excess funding levels over the cost of securing new BSPS2 benefits with an insurance company.
It is very important that your mother returns her option form. Members who do not return their option forms will be transferred into the PPF (option 1).
The situation is different depending on different members’ circumstances. If you need help, you can contact The Pensions Advisory Service British Steel helpline on 020 7932 9522.
TOP SIPPS FOR DIY PENSION INVESTORS