If my employer went bust, what will happen to my pension and the contributions that they owe me?

You may have heard in the news about pension savers losing their money in the event of their employer going bust. These stories often relate to members who are in defined benefit pension schemes which promise to pay them an amount when they retire based on their final salary or career average salary. Pension savings within these defined benefit schemes are generally protected by the Pension Protection Fund.

The People’s Pension is not a defined benefit scheme, it’s a defined contribution pension scheme instead. This means you and/or your employer have been steadily building up your own pension pot over the course of your employment. It’s your money, invested in your name. If your employer goes bust your money is held separately and won’t be available to your employer’s creditors. So, you’ll still have the pension pot you’ve been building up. Your money will be held on your behalf by the Trustee of The People’s Pension. Visit our webpage for more about how we keep your pension savings secure.

If your employer has gone bust, you’ll no longer receive contributions from them going forward. An Insolvency Practitioner will be responsible for gathering all the information on pension payments that your employer should’ve made before the insolvency date. If you wanted to take a small pot lump sum of under £10,000, we’d need to receive all the outstanding contributions first according to HM Revenue & Customs rules.

If you have a new employer, after your previous employer went bust, you can keep paying into your pension pot with The People’s Pension and your new employer may decide to pay into this as well. You can carry on contributing even if you change jobs and your new employer doesn’t or if you become self-employed. Find out how you can make personal payments into your pension.

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