Pension Wind Ups | Should you be worried about pension wind ups?

Pension Wind Ups

Pension wind ups are undeniably trying times for trust members, who are forced to wait on the outcome of decisions and procedures which will decide their financial future.  A pension scheme may come to an end for a variety of reasons, including underfunding or company merger – when pension wind-ups proceedings are decided upon and a date set for an end to payments from the operating body, measures must be taken to protect the interests of beneficiaries.

Pension Wind Ups  – Avoiding a worst case scenario…

Fortunately, worst case scenarios, of members losing future pension payments, are extremely rare. In the case of company mergers, pensions are usually transferred to the purchasing company without too much disruption to contributing members. When pension wind ups occur, trustees of failing schemes have options for protecting their beneficiaries – which include application to government compensation schemes.

Transfer to compensation funds…

Pension wind ups are undeniably trying times for trust membersThe Pension  Protection Fund and the Financial Assistance Scheme exist to provide compensation for pension schemes which become insolvent as a result of underfunding. The compensation structure of the schemes is designed to cover most or all of future payments – the PPF pays from 90 to 100% of pensions, while the FAS makes top-up payments of up to 90%. While the two schemes differ in terms of funding methods, they are both managed by the PPF board. Specific regulations affect both schemes – and should be consulted before application.

Although the PPF offers protection and reassurance for members of terminated pension schemes, it is important to remember that the compensation process takes time and involves an assessment period which can last from 6 to 18 months. Although the wait may draw out the uncertainty and anxiety felt by pension holders, the assessment is a crucial part of the application. In this period, a scheme’s assets and liabilities will be established and a compensation level decided – the assessment is a necessary step – and, in a turbulent economic climate, a way to ensure only pensions with a legitimately need receive the funds they require.

Pension Wind Ups  – Expediting the assessment process…

Waiting for the results of PPF transfer is difficult – but the assessment period may be expedited by the skills of trustees in charge of a pension scheme. Trustees are responsible for liaising with the PPF to facilitate assessment requirements, and fulfil administrative requests. Appointing individuals with experience in the PPF transfer process is a way of anticipating and dealing with problems which can delay this process. It is possible to use the services of professional trustees – who offer years of experience in the pension industry and will have the experience to deal with the specifics of a given case.

Pension Wind Ups  – Good trustees bring good outcomes…

Appointing the best trustees to oversee pension wind ups is a way of alleviating the worry and stress which accompany the process. In addition to their ability to secure PPF compensation, skilled trustees will be able to advise and reassure pension holders and bring consistency and transparency until the situation is resolved.

Although pension wind ups will never be pleasant experiences it is important to remember that, if handled properly by those in charge, there is no reason positive outcomes cannot be achieved.

Pension Wind Ups  – written by Hal Wightman of Pensions Clarity

If you enjoyed this article, subscribe below to get free email updates!

Powered by Subscribers Magnet

, , , , , , , , ,

No comments yet.

Leave a Reply

 Subscribe to My Newsletter