Final Salary Pension Wound up.

trevs

My final salary pension which I had been paying into for 23yrs was wound up by the new company which took over my old company.The transfer value of my pension fund was 1/3 rd of what they said it would be as there was insufficient money in the fund to provide for the members pensions.This was due to the fall in the stock market and the fact that the old company had not been putting enough money in the fund.The new company could easily put enough money into the fund to cover the shortfall but the law does not require them to do this so they didn't.
It's interesting to note that on the recent Trevor McDonald TV documentary on pensions our MP's pension fund shortfall was covered by the taxpayer.
They're all right jack.

dunstonh

It's interesting to note that on the recent Trevor McDonald TV documentary on pensions our MP's pension fund shortfall was covered by the taxpayer.

I didnt see the program but I would dispute that as the MPs pension contains no investment element and doesnt have a shortfall. Money goes in the pot one week and is out the next effectively. The same applies to nurses, teachers and all other civil servents. They are funded mostly by the taxpayer and contributions made into the schemes.

deemy2004

How could the new company easily put money into the fund to cover a 2/3rd shortfall ?

As presumably the above applies to all members thus the shortfall is likely to be a substantial sum of money.

Tel_4

Unfortunately the number of final salary scheme being "wound up" has increased dramatically over the past two years.

Both the FSA (Financial Services Authority) and the UK Govt have much to answer for, having actively encouraged people who had access to an employers final salary scheme to join it and quoting the benefits as "guaranteed".

The benefits were never guaranteed. There was always the danger that the employing Company could become insolvent, or, that the Company could stop making contributions and "wind up" the pension scheme.

There have been a couple of very high profile case's (Turner & Newall being one) that have made the Government sit up and address this scandal.

The result is two fold:

1) The Financial Assistance scheme (FAS)

2) The Pension Protection Fund (to be launched on 6/4/2005).

The FAS is designed to compensate the like's of yourself whose pension funds have commenced wind up prior to the launch of the PPF.

BUT the Govt appear to have backtracked, and you MAY be entitled to compensation from the PPF.

I would recommend that you write to the trustees of your pension scheme, the Department For Work & Pensions and your local MP to claim compensation from either or both.

Good luck.

T.

dunstonh

the "safety net" schemes are next to useless. It just provided the Govt with good soundbites for a time.

Plasticman

Anybody looking for a job with a good final salary pension scheme may want to take a look at this:

http://boards.fool.co.uk/Message.asp?mid=7638224&sort=recommendations

Tel_4

I disagree with the comments that the Govt schemes are next to useless.

Dont knock them until you have tried them and in the case of the PPF you will have to wait a couple of months.

T.

dunstonh

Tel wrote:

I disagree with the comments that the Govt schemes are next to useless.

Dont knock them until you have tried them and in the case of the PPF you will have to wait a couple of months.

T.

So there is going to be enough money in these safety schemes then to bail out everyone then?

I would be interested to hear why you think these schemes are good when all informed comment says they are not. The Govt estimates annual costing of the PPF at £340-£375 million. Initial industry costings have suggested nearer £1 bill a year. Solvent schemes funding insolvent schemes will mean lower benefits for those in solvent schemes and more likely an acceleration in the closure of solvent schemes.

trevs

deemy2004 wrote:

How could the new company easily put money into the fund to cover a 2/3rd shortfall ?

As presumably the above applies to all members thus the shortfall is likely to be a substantial sum of money.

Yes, but they are a cash rich company and the amount they would have to put in is peanuts to them.

trevs

dunstonh wrote:

I didnt see the program but I would dispute that as the MPs pension contains no investment element and doesnt have a shortfall. Money goes in the pot one week and is out the next effectively. The same applies to nurses, teachers and all other civil servents. They are funded mostly by the taxpayer and contributions made into the schemes.

I guess they mean that if the contributions paid into the scheme are insufficient to meet the pensions paid out then the taxpayer will foot the bill.

trevs

Tel wrote:

Unfortunately the number of final salary scheme being "wound up" has increased dramatically over the past two years.

Both the FSA (Financial Services Authority) and the UK Govt have much to answer for, having actively encouraged people who had access to an employers final salary scheme to join it and quoting the benefits as "guaranteed".

The benefits were never guaranteed. There was always the danger that the employing Company could become insolvent, or, that the Company could stop making contributions and "wind up" the pension scheme.

There have been a couple of very high profile case's (Turner & Newall being one) that have made the Government sit up and address this scandal.

The result is two fold:

1) The Financial Assistance scheme (FAS)

2) The Pension Protection Fund (to be launched on 6/4/2005).

The FAS is designed to compensate the like's of yourself whose pension funds have commenced wind up prior to the launch of the PPF.

BUT the Govt appear to have backtracked, and you MAY be entitled to compensation from the PPF.

I would recommend that you write to the trustees of your pension scheme, the Department For Work & Pensions and your local MP to claim compensation from either or both.

Good luck.

T.

Thanks for the information.