final salary shortfall.

penpon

hello, i have just received a letter about my closed final salary scheme, it closed in 2010, i have 25yrs in said scheme, but they are telling me that it has a £8,435,000 short fall, more and more colleagues are taking their pension early as they are frightened there might not be any money left in the pot, are they wise and should i sit tight, i have two more years to go before i can touch mine anyway but thought i would ask the forum for their opinions, it is a defined benefit scheme, hope i have give enough info, thankyou.

hugheskevi

but they are telling me that it has a £8,435,000 short fall,

Most schemes have a shortfall, nothing unusual or to be unduly concerned about.

more and more colleagues are taking their pension early as they are frightened there might not be any money left in the pot, are they wise

No, if the employer goes bankrupt and there isn't enough money in to fund pensions above Pension Protection Fund levels, it doesn't matter whether or not a person has commenced their pension. What matters is whether or not they have reached Normal Pension age.

That rule is because in the days before the Pension Protection Fund the senior folk at companies (who tended to be older) could take their pension just before the company went bankrupt and lose little if anything at the expense of other members.

should i sit tight

I wouldn't base any decision about when to commence the pension around the pension scheme's funding position - there are much more relevant and important factors.

atush

such as how much your pension would be over the PPF fund cap, your actuarial reduction, your health and dependent status, your other provision (25 years does'nt make a working life) nyour debts.savings etc.