IMPORTANT FACTS- What if the Company goes bust?
If the sponsoring company of a pension scheme is declared insolvent and there is not enough money in the scheme to pay all of the members’ pensions then the Pension Protection Fund will compensate those affected. They will receive usually receive a slightly lower pension than they would have done under their previous scheme. This is funded by an annual levy on all defined benefit pension schemes.
What if I have forgotten what pension pots I have or lose the details?
You can use the DWP’s Pension Tracing Service
Are you going to have enough income in retirement?
See this report by the BBC showing many young adults are not saving at all for their retirement and looking at what the impact of this could be.
What if I leave the Company before I retire?
You have two main options:
- Keep your benefits in the scheme and claim them when you retire – you become a deferred member
- Transfer your benefits out to your new company’s scheme or a private one
(1) will usually be the better option if the company you are leaving has a final salary scheme and your new one doesn’t, but you should seek independent financial advice.
If you haven’t built up much money in the scheme you may be able to take this as cash.
What happens if I leave my job?
As personal pensions are linked to you rather than your employer you can continue to contribute to them if you change jobs. However if your new employer has a GPP or similar arrangement it might be better for you to join their scheme instead. If you have pensions with a number of financial organisations you have two options:
- transfer them to your current pension provider
- leave them until you retire
The best option will depend on a range of factors and it is best to seek independent financial advice.
How much will I get?
The amount you get depends on lots of factors, including:
- how much you put in your pension pot whilst you are working
- what level of investment returns this money earns
- what type of pension contract (annuity) you choose to buy when you retire
Calculating how much you’ll get
Use this pension calculator to find out how much pension you could get:
Example: a woman currently aged 30 who wants to retire at age 65. She contributes £100 a month to her pension and her employer matches this. She wants her pension to increase with inflation but she doesn’t want any tax free cash or a spouse’s pension. This will buy her a pension of £543 a month in today’s money.