Pension Forecast Shortfall

Raggy73

Hi Everyone
I keep getting a letter from a works pension that I payed into that closed in April 2005 telling me at the moment there is a shortfall and the funding level is only at 79%. I've no idea what to do with this information or if I can withdraw what I have paid in and transfer it to another pension. Who can I go to for advice?

dunstonh

telling me at the moment there is a shortfall and the funding level is only at 79%.

79% is not too bad when you consider that the assumptions used on returns and the measure used for life expectancy usually overstate the likely shortfall in reality.

I've no idea what to do with this information or if I can withdraw what I have paid in and transfer it to another pension. Who can I go to for advice?

A local IFA with pension transfer specialist permissions (about 1 in 10 iFAs).

xylophone

This sounds like a deferred defined benefits pension.

The value is greater than £30,000?

If so, you will need the advice of a Pensions Transfer Specialist concerning any transfer out.

https://www.royallondon.com/media/press-releases/2018/may/five-good-reasons-to-transfer-and-five-good-reasons-not-to-royal-london/

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/

https://adviserbook.co.uk/

You would tick "confirmed independent" and "pension transfer"

Albermarle

The pension fund has liabilities/commitments to pay out pension funds in future . To pay out all these funds in future a figure has been calculated by an actuary as to how large the fund should be to cover all these commitments in future . Your fund has only 79% of what will be needed.
However most similar pension funds have the same problem, some a lot worse, so no need to panic.
There are measures the company/pension can take to improve the situation and we are talking about a very long time scale before the last pensioner in the scheme dies.

enthusiasticsaver

You need to know what type of pension it is. I wouldn't panic and transfer out just for that reason. Is it a large company pension scheme and do they have proposals for plugging the gap? Read the annual statement they usually send out.

If it is a defined benefit pension and the transfer value is more than £30000 then you will need advice as xylophone says. That will be expensive should the transfer go ahead. Most will advise you to keep it except in particular circumstances. One of those might be the instability of the scheme you are in. Many have similar shortfalls though.