The Occupational Pensions Regulatory Authority has issued guidance to pension scheme trustees regarding the wind up of their under funded pension schemes. According to the advice given by OPRA, trustees should continue with wind ups that are already in progress but be careful about starting new proceedings for schemes that are under funded.
Our Views
The Pension Protection Fund will be introduced to help members of occupational pension schemes that are wound up. Between 90% and 100% of benefits will still be gained, depending on whether you were retired from the scheme or not. In the meantime, the Financial Assistance Scheme will help people.
OPRA is urging trustees involved in wind-ups to calculate their liabilities so that the Government can put an amount for members on the Financial Assistance Scheme. The Government has mentioned an amount of £400m to be spread over 20 years but if schemes keep winding up, the benefits to members will be far less than Pension Protection Fund levels.
Our advice to members of pension schemes that are under funded or in wind up is to take independent financial advice from someone that understands wind-ups. Whilst you will probably have to pay for the expertise, it will give you a complete overview of your position and options.