Proposed changes to the British Steel Pension Scheme (BSPS) could set a precedent for other troubled industries, the UK's pensions lifeboat has cautioned today.
Responding to an ongoing consultation into the BSPS, the Pension Protection Fund (PPF) has warned that one of the options on the table – which would involve using legislation to slash the scheme's liabilities – could result in other struggling companies trying to follow suit.
"There is a risk of setting a precedent," the PPF's response read. "Although the government (including in the consultation document) has been at pains to stress the unique circumstances surrounding BSPS we would nevertheless expect other employers or industries to seek similar arrangements to reduce their pension scheme liabilities – effectively transferring value from scheme members to shareholders."
The pensions lifeboat's response also highlights that members of the scheme who had already reached pension age could find their benefits under the proposed changes being cut to a level not dissimilar to that which they would receive under the PPF, while a small minority could find themselves even worse off.
The warning echoes a statement former pensions minister Steve Webb made about the consultation earlier this month. Webb, who is now director of policy at Royal London, highlighted that the changes could result in some of the most vulnerable scheme members finding themselves as much as £10,000 out of pocket.
Webb has previously told City A.M. that amending the legislation for the BSPS could effectively drive "a cart and horses" through the existing pensions protection rules and would make it incredibly difficult to turn away troubled businesses looking for similar help in the future.
The BSPS consultation was opened by the Department for Work and Pensions last month. The consultation will run until Thursday.
A Department for Work and Pensions spokesperson said: "We are consulting on a wide range of options for the BSPS and are keen for as many people as possible to provide their views, including those who will be affected by any changes."
The Department for Business, Innovation and Skills has not responded to City A.M.'s request for comment at time of writing.