Advice needed

dazzles

Hi!
I have been receiving a final salary pension now for 7 years.It is paid to me monthly by the Actuaries of the company pension scheme, a totally separate company. What would happen if the company that I worked for went bust? Is my share of the "pension pot "with the actuaries already, as they are managing it ,or would payments stop in the event of my former employer going bust? hope you can help.....

EdInvestor

There would be no effevct unless your pension is more than 27k p.a. In the event of insolvency of the parent company, your pension would end up here:

https://www.pensionprotectionfund.org.uk

This Govt body guarantees income on final salary schemes in payment up to that level.

dazzles

many thanks EdInvestor...really useful site..and I am re-assured

MikeJones_2

If your former employer was the sponsoring employer of your defined benefit scheme - and if it went bust - your pension scheme would become eligible to approach the Pension Protection Fund.

If an employer fails there would be an initial Assessment Period (usually of around a year), during which time the PPF would examine whether the scheme would qualify.

There are limitations on what the PPF pays out in terms of the maximum pension, spouse's benefits on death and pension increases to pensions in payment.

The 'compensation' that the PPF provides to scheme members when a scheme is accepted into it IS NOT a mirror image of what your scheme provides.

Neither is the PPF the panacea that many people believe it be - but it is better than nothing - and there is some concern that it might struggle to fund compensation if too many employers go bust.

Anyone concerned therefore about the security of their employer would do well to familiarise themselves with WHAT, and as importantly, WHAT IS NOT available from the PPF.

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

EdInvestor

Some useful examples of how PPF compensation works here;

http://www.pensionprotectionfund.org.uk/ppp_leaflet_blue.pdf

Index linking is limited to 2.5% for pensions in payment. For those already retired at scheme retirement age the compensation limit is around 30k, the 27k figure I mentioned refers to the 90% compensation for those who have retired early.