Pension Scheme Crisis - What Should I Do?

bauhaus100

Having paid into my former employer's pension fund for over 18 years, I've just received a letter telling me that their liabilities are currently nearly twice as much as their actual assets. Although they're telling me that there's no need to panic, needless to say I'm panicking!

Can anyone put me in the picture regarding what the government would do should the fund actually be unable to cover its liabilities? The fund is a final salary scheme, so if I transferred my existing credits to another provider, it would be unlikely that I'd get anywhere near the benefits that I would if I stayed with the existing scheme (assuming that it doesn't go under).

One thing that really annoys me is that the good days of the late nineties, the company took "pension holidays" where they cut down on their contributions and filled the directors' pockets. Now they're pleading poverty, b******s!

ReportInvestor

Calm down and count to ten . 10 million other people have received these letters.

bauhaus100 wrote:

Having paid into my former employer's pension fund for over 18 years, I've just received a letter telling me that their liabilities are currently nearly twice as much as their actual assets.

I assume that this refers to the % if the scheme was wound up now, which is highly unlikely.

What is the ongoing funding level? Around 80% I'd guess.

See this MSE thread which has plenty of background information and comment about these letters - D_F_C is especially knowledgeable

Re pensions' holidays. The government, in its wisdom, had passed legislation forbidding companies to build up large surpluses in their pension funds. So as stock markets rose, many were effectively forced to take "holidays".

What is your company? Is it in good financial shape?

What action has it told trustees that it is going to take over the next decade to tackle the deficit?

Even if the company went bankrupt the government's PPF scheme will now guarantee your pension up to 90% of the first £25K you are entitled to.

What should you do?
Take an interest in the management of your pension scheme and ask questions of the trustees via your HR department to make sure they are on the case.

dunstonh

One thing that really annoys me is that the good days of the late nineties, the company took "pension holidays" where they cut down on their contributions and filled the directors' pockets. Now they're pleading poverty, b******s!

Gordon Brown saw that and thought the same which is why he removes around £5 billion a year out of pensions. Of course, he, like the companies forgot that stockmarkets crash.

Troubleatmill_2

He Bauhaus100

I guess I got mine early.
Have a look at the thread I started a while back also.

http://forums.moneysavingexpert.com/showthread.html?t=267276

Best
Troubleatmill