Occupational Pension Schemes and Final Salary Schemes

Advice on Occupational Pension Schemes and Final Salary Schemes from Sidstone Pension Services

Defined benefit pension schemes offer a guaranteed income based on your earnings whilst working, and paid for the rest of your life. Your employer/formal employer offers this guarantee so if there is insufficient money in the scheme to continue to pay out then by law the employer has to make up the deficit.

The Pension Protection Fund will only step in if the company goes insolvent. But only a proportion of the pension will paid out and depends on whether you have actually retired or not.

If you are still working at the company by retirement age then you will have a good idea as to whether they could provide you with a guaranteed payout for the rest of your life. However if you left the firm some time ago you will probably have no idea how safe your fund is, never mind whether it is in the position to “top up”  should the scheme be short of money.

If you do not wish to risk leaving your money where it is then you could:

• Seek a ‘transfer value’ quotation to find out how much cash the scheme trustees would give you if you were to move your pension benefits elsewhere;
• Ask a professional to give you an illustration of the benefits you might be able to achieve by moving your pension fund to an insurance company.

Moving away from a defined benefit pension scheme involves giving up any guarantees that it would have offered. Whether these guarantees are worth anything will depend upon the circumstances.

Always speak to an experienced adviser first.

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