Concerns about changes to my employer that will affect my pension
When a business faces a major event such as restructure, sale or insolvency this causes natural concern and may be known in the pensions industry as a “major event”. For some the changes may bring opportunities through redundancy, redeployment, retraining or retiring early but it will also bring a need to review your financial situation and questions about how best to handle the impact on your finances.
The Pensions Advisory Service is now part of “The Money and Pensions Service (MaPS)” and alongside the Money Advice Service and Pension Wise, our role is to help people make the most of their money and pensions. We offer impartial and free information and guidance on pensions and money issues, as well as supporting the provision and funding of debt advice. If you have a money/debt related concern you can access a wide range of support materials from the Money Advice Service and if you are 50 years or above and have a defined contribution pension then you might want to also book a Pension Wise appointment. If however your employer is facing significant difficulties and you have a defined benefit or final salary type pension you may find the following information particularly helpful to you as you think through how the changes could affect you.
However you contact any of our services, we will not tell you what you need to do or what products you should choose, but we will help you think through the implications and, when necessary, talk you though how you can access regulated financial advice and stay safe in your financial dealings. Importantly, our service will never contact you out of the blue.
I've heard a rumour that things are changing/there might be problems?
We often have a feeling about how things are going. Perhaps your business is struggling, merging with another organisation or you have heard comments about the cost of your pension scheme. This doesn’t always mean bad news but it helps to know where you stand just in case.
You might become aware or suspect that the company or scheme you are in is looking at making changes. If this is the case they will need to talk to you formally so until they do this, use the time to ensure that all your records are up to date with your employer and scheme should they need to talk to you. It is important that you check that the scheme has your current address, any changes in address, any changes in circumstances such as getting married, changing your name and getting divorced. It’s also a good opportunity to check that you have filled in a nomination of wishes form – this is something that tells the trustees of the scheme what you want to do with any money in the event of your death. If you are not sure you understand the pension benefits you can contact us to talk it through.
It's been reported in the news that my pension scheme is changing?
Many things can prompt your scheme to consider changing – these are called “events”. If the scheme is of a substantial size or you work for a large employer it is not unusual for this to be reported on in the news.
As the next steps become clearer the scheme or your employer will start to talk to you about what is happening to your pensions. There will normally be things for you to think through and decisions to be made. It’s important that you understand what the next step means, if there are any deadlines you need to be aware of and if you are being offered any assistance with the process. Many schemes arrange workshops or put in place arrangements to help people at this time.
If you want to find your own adviser its important to check that they are regulated and authorised to help you. You can find details of regulated financial advisers at: https://directory.moneyadviceservice.org.uk/en or from the FCA website: https://register.fca.org.uk/. If you are not sure how to go about finding an adviser, what to ask for or how to make the most of your session or just want to talk through your situation for some guidance on possible implications you can contact us for help. Your scheme may send you a letter on behalf of a number of government bodies such as the Pensions Regulator, the Financial Conduct Authority, the Pensions Protection Fund and the Money and Pensions Service outlining sources of help and FAQ’s that might be helpful to you.
My employer is proposing to make changes to my pension scheme and has started a consultation process
Your employer will make a proposal on the future provision of your pension benefits and advise the trustees/administrator of your pension scheme. The trustees/administrator of your scheme will contact you in writing. The correspondence from the trustees/administrators of your pension scheme will formally set out the proposed changes.
The trustees of your scheme or employer will spend some time talking to a range of stakeholders about your pension and how to secure the best way forward. This will include professional advisers, trustees and, if you have one, a union or their representatives. As these discussions are likely to close your scheme, the trustees of the scheme or your pension provider /employer will formally talk to you about the proposed change and what it is likely to mean to you. This may coincide with correspondence from your employer/former employer.
The trustees/administrator of your pension scheme/employer will formally propose changes to your scheme and then consult with you. They should explain:
- the pros and cons of different options (e.g. move from defined benefit (DB) to defined contribution (DC)/change age at which you can retire)
- the risk of being scammed
- contribution levels
- current value of benefits
- flexibility of benefits
- whether scheme could enter the Pension Protection Fund (PPF)
Again, if you are unsure of the implications of these changes it is a good idea to talk to a regulated financial adviser (which you would need to pay for) or to seek expert guidance. The trustees/administrators of your scheme/employer are likely to set up helpline services or additional support for you but you can also contact us.
A decision has been made after consultation on changes to the scheme and I've been formally notified of the outcome
As the next steps for your scheme become clearer it is important that you understand how these affect you. There is lots of help and guidance available but it is really important that you go to reputable sources of advice. Always check who you are dealing with and that any advice services used are regulated. A good source of guidance if you have a defined contribution (DC) pension, are close to retiring and thinking about your options is a Pension Wise appointment but if you are not sure what to do and want some help thinking things through contact us and we can help get you started.
When a decision has been reached on what is happening to your pension scheme, the trustees/administer of your scheme/employer should formally notify you and tell you about key dates.
If you haven’t heard anything and your colleagues have, you should check that the scheme has your correct details as soon as possible.
If your scheme is moving into the Pension Protection Fund (PPF) – they will contact you with information about what will happen next – this can be a long process so until they have completed any assessment they have to do it is unlikely that they will be able to give you any exact information on the level of retirement benefits that you will receive. In the event of a pension scheme entering the PPF assessment period it is unlikely that you will be able to transfer your pension to another scheme.
I've been approached directly about my pension by another company
It is possible that whilst the trustees and company consider their next steps – that they will communicate to you that they are looking at options. This is a sensitive time and some people may use the uncertainty to try to tempt you into new enterprises or schemes that may not be in your best interests. Beware of any direct approaches that are not endorsed by your scheme. If you are cold called about your pension this is now illegal so if you are approached its best to hang up. If you are worried or uncertain about any possible changes you can contact us. We are a government backed service that offers free, independent and expert pensions help.
Where can I get further help/guidance?
You can contact us on 0800 011 3797. We provide expert, free, independent and impartial guidance to members of UK pension schemes on pension and retirement saving issues.
The Pensions Advisory Service is provided by the Money and Pensions Service (MaPS) which helps people make the most of their money and pensions.
The Pensions Regulator (TPR)
TPR protects savers by making sure that workplace pension schemes are run properly. It works directly with employers and those running workplace pensions.
When pension schemes need restructuring, it provides guidance to trustees which helps ensure that they communicate effectively with savers.
It also provides detailed guidance on defined benefit (DB) to defined contribution transfers: DB to DC transfers detailed guidance.
Pension Protection Fund (PPF)
The PPF plays an integral role in supporting trustee communications to members in consent exercises where defined benefit scheme members are asked to make a choice where an option involves entry to the PPF.
Its role is to ensure the content in communications to members, especially that which covers the PPF and its compensation, is accurate, clear and consistent to ensure members are able to make a well-informed choice.
Financial Conduct Authority (FCA)
The FCA is the regulator for the providers of personal pensions, including stakeholder personal pensions, self-invested personal pensions and workplace (group) personal pensions. These are all forms of defined contribution (DC) pensions. The FCA also regulate the advice (including pension transfer advice) given by regulated advisers, asset managers and other firms that provide investment services.
To find a regulated financial adviser please use the following link to the MAS Adviser Directory: https://directory.moneyadviceservice.org.uk/en
The remit of Pension Wise is to offer anyone over the age of 50 with a defined contribution pension a free appointment to talk through the options they have available to take their pensions savings, what things to think about and how to avoid falling victim to a pension scam: https://www.pensionwise.gov.uk/en. Appointment booking line - 0800 138 3944.
Where can I find out more?
If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.