Deferred Pension Winding Up

kbfanclub
kbfanclub Posts: 15 Forumite
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in Pensions, annuities & retirement planning
Hi, just received a letter form the trustees of an old deferred DB pension saying they are considering wind up due to severe underfunding. If I'm reading it right they are almost certainly going to wind up and they are giving me an opportunity to tranfer out (CETV) before the wind up.



As a bit of background it's a group scheme and it's only my section looking to wind up. Employer went bust a number of years ago. My section is underfunded down to 40%. Does not qualify for PPF. I've got 3 years to retirement date.



Is getting / taking a CETV likely to be the best / only option?

Comments

  • woolly_wombat
    woolly_wombat Posts: 819 Forumite
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    What will happen if you don't transfer out?
  • kbfanclub
    kbfanclub Posts: 15 Forumite
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    woolly_wombat wrote: »
    What will happen if you don't transfer out?


    I don't know. The letter says that in a winding up situation benefit entitlements will have to be reduced to current funding levels. Can they just reduce the pension by 60%?
  • sandsy
    sandsy Posts: 1,719 Forumite
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    Why doesn't it qualify for the PPF?
  • xylophone
    xylophone Posts: 44,394 Forumite
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    https://www.pensionsadvisoryservice.org.uk/pension-problems/pension-security/your-scheme-is-winding-up

    The above may be worth a look.

    Are the Trustees offering to pay for independent advice for the members?
  • kbfanclub
    kbfanclub Posts: 15 Forumite
    First Anniversary Combo Breaker First Post
    Why doesn't it qualify for the PPF?


    No idea. The letter says they applied for an assessment for PPF and were rejected.



    https://www.pensionsadvisoryservice.org.uk/pension-problems/pension-security/your-scheme-is-winding-up

    The above may be worth a look.

    Are the Trustees offering to pay for independent advice for the members?




    Can't see anything there that's really helpful. They say I should get independent advice but definitely not offering to pay for it.
  • hyubh
    hyubh Posts: 3,531 Forumite
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    kbfanclub wrote: »
    No idea. The letter says they applied for an assessment for PPF and were rejected.

    What exactly was the language used here? 'Assessment period' = holding period where a scheme enters the PPF, but there's still a chance it may come back out. This presupposes eligibility however, and if a scheme is eligible, the trustees will know, because it will have to pay the 'levy' to help fund the PPF.
  • Marcon
    Marcon Posts: 10,661 Forumite
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    edited 15 September 2018 at 12:03AM
    kbfanclub wrote: »
    I don't know. The letter says that in a winding up situation benefit entitlements will have to be reduced to current funding levels. Can they just reduce the pension by 60%?

    I'm doing quite a bit of guessing here, so check with your scheme...

    When did the employer go bust? If it was before the PPF came into existence (April 2005), then that is the most likely reason that they are not eligible for consideration for entry into the PPF.

    If you are being offered a CETV, it will be reduced because the scheme is underfunded.

    Can they reduce benefits when winding up the scheme? Yes, if there is no employer to 'top up' the fund when it winds up - there are no funds available from other sources so no option but to do that. There will certainly be no funds to pay for financial advice for members - as much cash as possible needs to be put towards buying the members' pension benefits.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • xylophone
    xylophone Posts: 44,394 Forumite
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    What is the CETV being offered?

    Did you regard this small pension as a major or minor part of your retirement planning?

    How old are you?

    Is a transfer into your current employer's scheme/any personal pension you may have worth consideration?

    Have you obtained a new state pension statement?

    https://www.gov.uk/check-state-pension
  • westv
    westv Posts: 6,084 Forumite
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    Marcon wrote: »


    When did the employer go bust? If it was before the PPF came into existence (April 2005), then that is the most likely reason that they are not eligible for consideration for entry into the PPF.

    I'm sure the previous employee that I have a PPF (or FAS as it was then) pension with went bust in 2003.
  • Marcon
    Marcon Posts: 10,661 Forumite
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    westv wrote: »
    I'm sure the previous employee that I have a PPF (or FAS as it was then) pension with went bust in 2003.

    I could be wrong - thank you.

    OP, there's a list of reasons why a scheme would not be eligible for the PPF. They might quite tricky reading for a non-pensions person, but maybe one of the reasons listed might 'spring off the page' (if not, the scheme will be able to confirm): https://www.pensionprotectionfund.org.uk/About-Us/eligibility/Pages/Eligibility.aspx
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
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