9. Option Letters
- Q9-1. I think my numbers are wrong – can you help?
- If you think any of the numbers in your Option Letter or Personal Statement are incorrect, please contact the Plan Administrator by emailing email@example.com or calling 01707 607601.
- Q9-2. Why are some or any of the options not available to me?
- The options available to you depend on your Share of the Funds (please see the Glossary Factsheet for an explanation of this), when your pension was earned, your age and whether or not you have started to take your pension. For some members this may mean you have no options.
- Q9-3. Why is the Plan not paying for financial advice to help me decide?
- As explained in your letter, the Plan has limited assets. We are not able to pay for financial advice to members, as the cost of this would need to be met by the Plan and this would reduce the benefits we can offer to all members. However, we have negotiated preferential fixed fees for support from our selected financial adviser – please refer to your Option letter to see if this applies to you
- Q9-4. When/Who will the Trustee select their chosen insurance provider?
- The Trustee expects to select their chosen Insurance Provider later this year following a robust selection process including stringent ‘due diligence’.
- Q9-5. Why do I have to complete a form / why is there no form?
- The Trustee is writing to approximately 30,000 members and most have more than one option so you will need to complete an Option Form if you do not wish to take your ‘default’ option. You may also need to contact us to start the process for some options or complete a Payment Form – please check your letter to see if this applies to you.
Some members may not have options and therefore a form is not included in their letters.
- Q9-6. How were my benefits calculated?
- While the assets in the Plan (following receipt of the recoveries from the insolvency proceedings) are greater than the amount required to secure benefits equal in value to PPF Compensation (PPF Pension Value), there are insufficient assets to secure Full Plan Benefits for all members. As a result, the Scheme Actuary has calculated each members’ individual share of the assets which are available to provide benefits for that member.
Your individual share of the assets (or Share of the Funds) is at least equal to the value of your PPF Compensation. If the value of your Full Plan Benefits (your ‘Plan Pension Value’) is greater than the value of your PPF Compensation, your Share of the Funds will reflect a fixed proportion of the difference between your Plan Pension Value and PPF Pension Value. The fixed proportion will be the same for all members and will be dependent on the total remaining assets in the Plan after the cost of securing benefits equivalent to PPF Compensation for all members is taken into account.
Your benefits have been calculated by the Scheme Actuary and reflect the benefits we expect to be able to afford to secure with our chosen Insurance Provider, based on your Share of the Funds.
- Q9-7. I am in poor health – if I get my doctor to confirm this then will you be able to increase my pension?
- If you are already receiving a pension, the pension secured with our chosen Insurance Provider cannot be adjusted to reflect your health status.
However, if you are not yet receiving your pension and will be under Normal Retirement Age when the Plan exits PPF Assessment, you have more flexibility around how you take your benefits. Please see the Transfer Value factsheet for more information on this.
- Q9-8. What are the chosen insurance provider’s terms?
- These are the terms that apply to the policies issued by our chosen Insurance Provider who will provide details to policy holders once benefits have been secured.
- Q9-9. Is there anything in this process which would lead us to a similar situation as British Steel?
- The Trustee is aware of the British Steel situation and understands why this may cause members concern. Although we believe this exercise to be different to that of British Steel and present less risks to our members we have taken steps to reduce any similar risks and advised the following bodies of our approach.
- The Pensions Regulator www.thepensionsregulator.gov.uk
- The Pensions Advisory Service www.pensionsadvisoryservice.org.uk
- The Financial Conduct Authority www.fca.org.uk
In particular, when reviewing the British Steel process, the key concerns raised by the Government, were:
- members had a short time frame to make an important decision around whether or not to transfer their benefits to an authorised provider or remain in the PPF, and
- the financial advisers who contacted members may have been incentivised to promote transfers.
To address these issues, we have undertaken a stringent selection process to select a financial adviser which is not incentivised in any way related to any decision you make and ensure you have at least 3 months to make any decision, plus cooling off and reconfirmation periods where applicable.
Please also refer to the Pension Scams leaflet included with your Option letter.
- Q9-10. I am a pensioner with an estimated back payment. How has this been calculated?
- If you have an estimated back payment, it means that the pension you have received from the Plan during the PPF assessment period (i.e. since January 2009) has been restricted to comply with the PPF compensation rules. At the end of the assessment period the Trustee will calculate how much your Plan pension has been restricted over the whole period, and a proportion of this amount will be paid to you as a back payment. The proportion will be the same for all members and will be dependent on the total remaining funds in the Plan after the cost of securing benefits equivalent to PPF Compensation for all members is taken into account. This is the same proportion used to calculate your Share of the Funds – see Q8-4
The restriction is equal to the difference between the pension you have been paid during the assessment period and the pension that you would have been paid under the Plan rules. The complex and detailed calculation will depend on a number of factors, including when your pension started to be paid, the amount your pension was restricted at that point (or at January 2009 if later) and the subsequent restrictions on each annual pension increase. If you started to receive a dependant’s pension during the assessment period, it will also include any earlier assessment period restrictions that were applied to the deceased member’s pension, or any lump sum death benefits (including bereavement grants) payable under Plan rules.
- Q9-11. Can I transfer to my SIPP if I take advice through LEBC?
- LEBC have arrangements in place with selected pension providers that are able to accept transfers from Plan members. If you have a SIPP in place, or another pension arrangement, and you wish to consider transferring your Share of the Funds to this personal arrangement, LEBC will need to send a letter of authority to you to complete so that they can obtain the necessary information. Please note that obtaining information about personal arrangements can take time and the Trustee is not able to extend the option deadline due to the overall insurance timeframe. However, if you select the Transfer Value option you will have a right to change your mind when we write to you with an updated Transfer Value as we approach the expected date of transfer. Up until then, if you elect to transfer, LEBC can consider your own personal arrangement (if this cannot be completed before the option deadline) to see if this is a better alternative for you than the arrangement that LEBC has in place. This would form part of the transfer processing stage and charge.
In addition, please note that personal pension schemes typically do not require advice to switch from one personal pension to another. LEBC, through their advice process, can discuss this further with you.