The People’s Pension Scheme (the Scheme) is a defined contribution occupational pension scheme. People’s Financial Services Limited is the provider of the Scheme and is part of the B&CE Group, a not-for-profit group of companies which provide financial products and benefits for working people. Your employer is one of many who use the Scheme as their workplace pension scheme.
Because the Scheme is established under a trust arrangement, your pension pot and the assets of the Scheme are held legally separate from both B&CE and your employer. This keeps your money secure – see ‘What if things go wrong?’ below for more information.
The People’s Pension Trustee Limited (the Trustee), whose directors are independent from B&CE, manages the Scheme in line with its governing trust deed and rules. The Trustee is also responsible for the investment of your pension pot, in accordance with any instructions you may have provided. It is the Trustee’s duty to follow the terms of the trust and act in the best interests of scheme members and other beneficiaries.
The Trustee has appointed B&CE Financial Services Limited (another company within the B&CE Group) to carry out the day-to-day administration of the Scheme.
Pensions law, with which the Scheme has to comply, is extensive and there is a raft of member protection requirements.
In addition, the Scheme is registered with The Pensions Regulator, the UK regulator of work-based pension schemes. The Pensions Regulator oversees the running of pension schemes and can intervene in cases where scheme trustees, employers or advisers may have failed in their duties. The Pensions Regulator’s aims include improving confidence in pensions by protecting members’ savings and encouraging high standards in the way pension schemes are run.
The Trustee ensures that the Scheme complies with pensions law and the Codes of Practice and guidance issued by The Pensions Regulator.
The Scheme is also registered for tax purposes with HM Revenue & Customs – this gives you a favourable tax treatment on your savings.
What if things go wrong?
If your employer was to become insolvent – your pension would be safe as the Scheme’s assets are separate. So, they won’t be available to your employer’s creditors.
The same would apply if People’s Financial Services Limited were to become insolvent.
If the Scheme terminates and the Trustee decides to wind it up, your pension pot is protected and cannot be used to meet the Scheme’s wind-up cost.
If the Scheme’s administrator (B&CE Financial Services Limited) were to become insolvent, the Trustee would appoint new administrators to operate the Scheme.
If the trustee company was to become insolvent, new trustees would be appointed. This won’t affect the Scheme’s assets or your pension savings.
If the investment manager, State Street Global Advisors Limited (SSGA) or any other investment managers appointed, were to become insolvent, new investment managers would be appointed. It is possible that the scheme investments held by the Trustee could, in extreme situations, be affected by the insolvency of the investment manager but considerable protection is in place.
Currently, all contributions are invested by SSGA in highly regarded, mainstream pooled investment funds accessed via a long-term insurance contract with Managed Pension Funds Limited. This is a typical investment structure used by many pension funds in the UK and is designed to provide more protection to members’ pension savings.
Financial Services Compensation Scheme
If Managed Pension Funds Limited was to become insolvent, it may be possible for any deficit to be recovered from the Financial Services Compensation Scheme (FSCS), although we believe this position has yet to be tested. See www.fscs.org.uk for further information. It should be noted that an insolvency event of this kind that ultimately resulted in a detrimental impact on members’ pension pots would be an extreme event. The Trustee of the Scheme keeps all investment managers under careful review based on independent investment advice from a prominent FCA-authorised and regulated advisory company.
Annuities at retirement
Some members who take retirement benefits from the Scheme do so by securing an annuity with an insurance company. If the insurance company does not meet its obligations due to insolvency, members may qualify for compensation in their own name from the FSCS. The maximum level of protection is currently stated by the FSCS as 100% of the retirement income being drawn down from that product as a benefit falling due.