Government Final Salary Pension Protection Scheme

GordonSadler

I need some points of clarification on the government protection scheme. The major part of my retirement income will come from a preserved final salary pension with a company that I left some time ago. I also 2 other preserved final salary pensions that I am less worried about. I am 58 now and working as I made the decision to work up to 65 to maximise the amount I would receive in final salary pension. That said, the company that this pension is now with (it took over the company that I worked for) has been in financial difficulties (I wont say who it is, but its a major food manufacturer) for some time and the last communication from the pension scheme to me covered the agreement of the company to make significant additional payments into the scheme to make up a shortfall of company contributions.

An front page article in todays (Sat 21st Feb) Daily Telegraph has further worried me, by saying a number of final salary pension schemes will not be able to meet their commitments.

I understand there is a government protection scheme for pensions that are affected by company failure, but I am unclear on what it actually covers, and I am asking here for someone to explain the difference of what the scheme covers between a pension that has already been taken (whether early of normal) and a preserved pension.

I suspect my situation is fairly common, but I have difficulty in finding sources of good information. I know this forum has some very knowledgeable members.

hugheskevi

What you are referring to is the Pension Protection Fund - read their website which details the protection.

I am asking here for someone to explain the difference of what the scheme covers between a pension that has already been taken (whether early of normal) and a preserved pension.

The differences in protection depend on whether you have reached Normal Pension age or not - whether you have commenced the pension or not does not matter.

As well as the headline reduction to pension (from 100% to 90% for those below Normal Pension age) don't overlook the loss in revaluation and indexation - in many cases this will be a considerably bigger loss than the change from 100% to 90%, but the exact loss will depend on which years you accrued the pension in.