Calls have recently been made for the Government to take action to protect pension scheme members if the scheme is closed or "wound up". If a person has worked and paid into their employer's pension scheme for their entire working life, they should not have potentially the whole lot taken away if the pension scheme is wound up.
Mr McLean the chief executive of OPAS, the pension advisory service commented that he was asked by a 60-year old man who lost a pension that would have paid him an annual inocme of £30,000 due to his scheme being wound up. His question was simple “how can this happen"? Mr McLean believes the Government should answer the question and accept responsibility. With the number of company pension schemes being wound up, OPAS admitted to being asked whether former pension scheme members would be safer transferring their money into a personal pension plan, rather than leaving it in the scheme. Mr McLean said: Years ago, or even 12 months ago, it would have been described as mis-selling if we had said yes. But now, it is different because it might be safer to be out of a company scheme.
Our View:
Mr McLean's statement about transferring out of company pensions is a worrying one and people should not take it as a green light to transfer all of their pensions. Pensions are complex and whilst many pension schemes are in the red, some are still firmly in the black and pose no risk. With the pension mis-selling scandal in the 1980's and early 1990's people should be sceptical about transferring potentially guaranteed pension benefits where the employer takes the risks, to a pension in their own name where you take the risks
.In our view, advice is crucial. We also hope that the Government will come up with measures to stop people losing their pensions in the event of wind up. To protect yourself, keep up to date with your pension scheme and the employer. Get a copy of the scheme accounts once per year and if you do not understand them, ask. Pensions are valuable and you need to do everything possible to safeguard your entitlement.