What are Protected Rights Pensions?
Question asked by Grame Wilkinson
I’m worried that if the company I work for were to go bust or run into financial difficulty, I would lose my pension savings. How safe are company pensions and what happens if the company does run into trouble?
There are lots of rules and regulations in place to ensure that money held in your company pension is safe.
If the worst happens, and your final salary pension scheme ends up being wound up because the company you work for has gone bust, then you will usually be able to claim compensation from the Pension Protection Fund.
This was set up in 2005 to protect people with final salary pensions. It does not apply to people with money purchase or defined contribution pensions.
If you have a defined contribution pension and the company you work for goes bust, your pension savings should be safe, as they will be held by the bank or fund manager it is invested with.
If they run into financial difficulties, then the Financial Services Compensation Scheme (FSCS) will aim to move your money to an alternative company. If this doesn’t work, you should get 90% of whatever you’ve saved into your pension back.