pension now worth nothing!

clarabella_big_momma · 27 February 2006 at 1:32PM

Help! my father who's 62 has just ofund out his company pension that was due to be worth 20k a year is only going to be worth 2k. he now feels he cannot afford to retire. this is a nightmare! what can he do about this , he paid into it since he was 20-odd years old, it's a steel works pension scheme...what happens to the millions like him, is there any come-back?

Pal · 27 February 2006 at 1:41PM

Why has his pension been reduced so significantly?

ReportInvestor · 27 February 2006 at 2:01PM

Welcome to the site cbm. I'm sorry to hear your news.

Is the company ASW or another company that has been wound up? Is this £2K expected pension to come from the Financial Assistance scheme.

clarabella_big_momma wrote:

what happens to the millions like him, is there any come-back?

I think there may be about 100,000 in the same boat. The Financial Ombudsman has been investigating if there should be compensation, but the Treasury is likely to fight tooth & nail for every last £

.

exil · 27 February 2006 at 2:03PM

I do deeply sympathise. It may not be much comfort to you, but it's unlikely "millions" will be in the same boat as your dad. The problems really arise if the former employer goes bust (or nicks the money like Maxwell), which I suspect is what has happened here.

Here's the full monty:- http://www.direct.gov.uk/MoneyTaxAndBenefits/PensionsAndRetirement/CompanyPensions/CompanyPensionsArticles/fs/en?CONTENT_ID=10026635&chk=DHN/ol

Basically, it's possible your Dad may get help either from the Financial Assistance Scheme or the Pension Protection Fund, depending on the exact circumstances.

ReportInvestor · 27 February 2006 at 2:05PM

Maxwell was the problem.

As a result of him the rules were changed so that pensioners or those on the brink of retirement got the lions share of any fund assets left.

Another case of the law of unintended consequences.

exil · 27 February 2006 at 2:59PM

Indeed. But it'd difficult to justify the opposite approach of dividing assets
in proportion to contributions made so existing pensioners get a big cut in their pension.

At least with money purchase you KNOW you're going to end up with a c**p pension well in advance. With FS you can assume you're heading for a deckchair-on-the-lawn golf-every-day retirement and end up with nothing like the OP.