How safe is your pension?

How safe is your 'deferred final salary' pension?

The Pension Protection Fund was established to pay compensation to members of eligible defined benefit pension schemes, when there is a qualifying insolvency event in relation to the employer and where there are insufficient assets in the pension scheme to cover Pension Protection Fund levels of compensation.

The publicity surrounding the Pension Protection Fund (PPF) has convinced most individuals that the “problem” has been solved, but schemes which require assistance from the PPF to fund benefits could leave some members seriously disadvantaged when they retire.

The majority of deferred members are concerned about the security of their final salary pension scheme benefits, yet most advisers are not in a qualifying position to offer advice on a scheme's current status, and whether or not a transfer of occupational benefits is the right thing for the deferred member.

Nobody can predict which schemes will get into difficulty and require assistance from the PPF, and hopefully most clients never have to be put in a position whereby they need the protection from the PPF, but we can be sure that many thousands of our clients will be affected in the future, and may suffer as a result.

Recent examples show that it is now too late to offer help to deferred members of the MG Rover Group Pension Scheme or Leyman Brothers, but it is better that deferred members are aware of their position sooner rather than later in case the scheme gets into financial trouble.

To find out more about your 'deferred' benefits and what the potential implications of coming under the PPF could be for your 'preserved' pension benefits, please contact Ashton Hoyle to discuss futher the benefits of getting a full report.