Sadly, it is possible to lose your pension pot due to circumstances that are simply outside of your control. However, the good news is that the Government does have many regulations in place to ensure that your hard-earned fund is protected – even if your pension provider or the company that you work for goes bust. 

What happens to my pension when the company I work for goes bust? 

Before taking any kind of action, you should first consider what type of pension you were enrolled in at your workplace. This could either be a defined contribution pension scheme or a defined benefit pension scheme. 

Defined contribution pension schemes 

A defined contribution pension is the most common type of pension to be enrolled in. In this type of scheme, your retirement savings rely on how much money you and your employer contribute. Therefore, the final value of your defined contribution pension is dependent on the number of contributions that have been paid, as well as the performance of these investments.

If you’re enrolled in a defined contribution pension scheme and the company you work for goes bust, your fund should still be secure and protected. This is because this type of pension is managed by a pension provider and not your employer. However, you will lose out on any future contributions that your employer should have made to your pension. Therefore, when it comes to your defined contribution pension scheme, it would be best to contact your pension provider to assess your options. 

Defined benefit pension schemes 

Also known as “final salary pension”, a defined benefit pension is another type of workplace pension that pays you an income in respect of your salary and the number of years you have worked for your employer. 

If you’re enrolled in this type of pension and the company that you work for falls through, there are several things you should know. First of all, with a defined benefit pension, it is ultimately the responsibility of your employer to make sure there is enough money in the scheme for your retirement years. Secondly, it’s important to know that your pension fund will remain untouched even if your employer does go into financial trouble, as company pensions are kept separate from the rest of their assets.  

Thirdly, if your employer does not have the funds to pay your pension, your money will still be protected by the Pension Protection Fund (PPF). If you have reached the retirement age that is specified by the defined benefit pension scheme, the PPF will compensate you for 100% of your pension. If you haven’t reached this retirement age, you will only be compensated for 90% of your fund. Furthermore, if you feel that there are signs of negligence in your company’s management of your pension scheme, you may also be able to claim further compensation from the Fraud Compensation Fund. 

What happens if my pension company goes bust? 

Pension providers should be regulated by the Financial Conduct Authority (FCA). If your pension company is under regulation, you will get compensation for up to 100% of the current value of your pension pot capped at £85,000 from the Financial Services Compensation Scheme (FSCS)

I do not know who my pension provider is – is my pension safe?  

Due to the extensive number of pension providers that are out there, you’ll be pleased to know that the Government has a free pension tracing service, designed to help you trace any old pensions that you may have some record of. Although this service won’t help you reclaim money, it will guide you in the right direction as to what to do next if your pension provider goes bust. 

Generally speaking, the more information that you can provide about your employer or pension provider, the better. Some of the information that can be of beneficial use includes: 

  • Any current or previous company names 
  • The current or previous company address 
  • The dates you were employed there 
  • Any payslips from the past  

Have you been mis-sold your pension scheme? 

While it is important to know what to do should your company or pension provider go bust, it’s even more crucial to make sure that you weren’t mis-sold your pensions in the first place. At Expert Pension Claims, queries related to pension mis-selling, investment mis-selling and SIPP mis-selling are what we deal with. Think you have a claim? Contact our dedicated team on 0161 968 0768 or simply fill out our online enquiry form

Expert Pension Claims is a claims management company. We do charge a fee for our services, but this is only if your claim is successful. We do not charge a cancellation fee. For more information, visit our fees page.