Is your workplace pension at risk?

The collapse of construction and services company Carillion revealed that the company has a large pension deficit of at least £580m, which has left some of its workers worried about how much they will receive in pension income when they retire. It has also prompted workers from other companies to consider how safe their pension is.

The Carillion pension scheme is a defined benefit (DB) scheme where the final pension income is based on a percentage of a worker’s final salary. In the last Pension Protection Fund’s review of DB pensions, they found that many schemes are in surplus and will be able to meet their obligations.

In September 2017, a study by the Pensions and Lifetime Savings Association (PLSA) found that most defined benefit schemes have a sustainable model and are able to honour pay-outs. Although the general health of many pension schemes is good, the PLSA did find some schemes that had deficits, and some were in danger of collapse.

The Pension Protection Fund (PPF) will step in to pay pension income if a pension fund collapses, and this is probably what will happen in the case of the Carillion pensions. However, any bailout could result in pension scheme members receiving less income than the scheme originally promised.

If you are concerned about your pension, seek professional pensions advice to find out how you can increase your pension savings to protect your income in case your workplace pension scheme cannot pay out the full amount it promised.

Source used: http://www.bbc.co.uk/news/business-42705641

A PENSION IS A LONG TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND UPON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST RATES AND TAX LEGISLATION