Informed Choice Radio 084: What happens when your pension scheme goes bust?
In this episode of Informed Choice Radio, Martin talks about what happens when your defined benefit pension scheme goes bust.
There is also a roundup of the latest personal finance news and an update from the world of Informed Choice.
Retail giant BHS going into liquidation is clearly bad news for its 11,000 employees, but what about the 20,000 members of its pension scheme?
There are around 6,000 defined benefit pension schemes in the UK. The majority of these are in deficit, which means they don’t have enough assets to cover their liabilities.
The latest estimates suggest it would cost £571m to fully cover the BHS Pension Scheme liabilities, using insurance or a buyout.
That money simply isn’t there, so what happens to members of the BHS Pension Scheme?
There is a lifeboat scheme in the UK, it’s called the Pension Protection Fund.
This was established to pay compensation to members of eligible defined benefit pension schemes, when there is a qualifying insolvency event in relation to the employer and where there are insufficient assets in the pension scheme to cover Pension Protection Fund levels of compensation.
In this episode of Informed Choice Radio, Martin explains how the Pension Protection Fund works, who pays for it and what level of compensation the members of bust pension schemes might expect to receive.
Personal finance news update
-The most expensive seaside town in the UK is Sandbanks in Dorset, closely followed by Salcombe in Devon.
-Older investors appear to be holding their nerve ahead of the EU Referendum, with almost three quarters not changing their investment strategy since the vote was announced.
-The final design for the new £5 bank note has been revealed, before it enters circulation on 13th September.
-Bond giant Pimco has warned that a “radical” political party taking power in the eurozone could tear the bloc apart.
-Department store giant BHS is going into liquidation, after attempts to find a buyer for the stores failed.
-A vote to leave the European Union could result in a 10% fall in the value of the FTSE 100 index during the next year.
Useful links mentioned in this episode
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