National advice firm LEBC has agreed to offer defined benefit (DB) transfer advice to 32,000 members of the Nortel pension scheme.
The scheme collapsed nine year ago at the same time as the Canadian telecommunications giant Nortel. Negotiations between the Pension Protection Fund (PPF) and the scheme’s trustees resulted in a £550 million injection from the global insolvency in March.
This extra cash meant the scheme could leave the PPF and would be bought out by an insurer which would provide better members’ benefits than under the PPF.
Ahead of this exit from the PPF, the trustees of the Nortel pension scheme have written to all members with a pension estimate and outlining their four options ahead of an 8 June deadline which are:
- taking a winding-up lump sum instead of a pension if their pot is worth less than £18,000;
- a continuation of a DB pension income through the new insurer;
- taking a non-increasing DB pension income through the insurer which is higher initially but does not increase in line with inflation;
- transferring out of the scheme by taking a DB transfer.
The trustees said most members have ‘one or more options and there are strict time limits by which you must act if you do not wish to take your "default" option’.
For members who want and are able to take the transfer option, the Nortel trustees came to an agreement with LEBC whereby it was brought forward to provide DB transfer advice to members at a reduced fixed fee rate.
LEBC arranged for a member helpline which provides free non-personalised guidance for members on transfers. If they want to go through the DB transfer advice process, the firm charges a non-contingent £714 plus a follow up fee of £90.
Kay Ingram (pictured), director of public policy at LEBC, said members are responding well to the advice offer.
‘The Nortel scheme members have shown a high level of interest and engagement in the guidance and advice they have been offered,’ she said. ‘We are still in the process of delivering this, but it is going well and is on schedule. Each member who has requested it will receive regulated advice based on their personal circumstances.’
Ingram said the reason why LEBC’s fees are so low is because of the ‘operational efficiencies we are able to make with our bionic advice processes’.
This ‘bionic advice’, Ingram explained, allows the firm to process so many clients by using a combination of custom-built software for the fact find and other analysis before a human adviser provides an evaluation face-to-face or over the phone.
‘Our bionic advice proposition makes it possible to offer personalised and regulated advice to large numbers within a set timeframe,’ Ingram said.
The advice firm said it would not process any clients who wish to transfer against LEBC’s recommendation.
When asked how many members have taken a transfer through LEBC, Ingram said ‘client confidentiality’ means the firm cannot provide this information.
For members who do not take a transfer before the deadline they are still able to transfer out later but their transfer value may be less depending on the terms of the insurance buyout.