How your pension is protected depends on the type of scheme.
Defined contribution pension schemes
If your employer goes bust
Defined contribution pensions are usually run by pension providers, not employers. You will not lose your pension pot if your employer goes bust.
If your pension provider goes bust
If the pension provider was authorised by the Financial Conduct Authority and cannot pay you, you can get compensation from the Financial Services Compensation Scheme (FSCS).
Trust-based schemes
Some defined contribution schemes are run by a trust appointed by the employer. These are called ‘trust-based schemes’.
You’ll still get your pension if your employer goes out of business. But you might not get as much because the scheme’s running costs will be paid by members’ pension pots instead of the employer.
Defined benefit pension schemes
Your employer is responsible for making sure there’s enough money in a defined benefit pension to pay each member the promised amount.
Your employer cannot touch the money in your pension if they’re in financial trouble.
You’re usually protected by the Pension Protection Fund if your employer goes bust and cannot pay your pension.
The Pension Protection Fund usually pays:
- 100% compensation if you’ve reached the scheme’s pension age
- 90% compensation if you’re below the scheme’s pension age
Fraud, theft or bad management
If there’s a shortfall in your company’s pension fund because of fraud or theft, you may be eligible for compensation from the Fraud Compensation Fund.
If you want to make a complaint about the way your workplace pension scheme is run, read guidance from MoneyHelper to find out who to contact.
