Pensions

The pension scheme is separate to the assets of the company and funds in the scheme cannot be paid to the employer’s creditors.

The effect of the employer’s insolvency depends on the type of pension scheme. There are two types: the first is a defined contribution (money purchase) scheme such as a personal pension, group personal pension, stakeholder pension or Master Trust type scheme. These schemes operate independently from the employer. The pension contributions go into a pot and the final amount available on retirement depends on how well the investments have performed. The second type of scheme is known as a defined benefit (final salary) scheme, where your pension is based on how much service you have in the scheme, your age when you retire and your salary.