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How safe is your pension?

Labour MP John Mann, who is a member of the Commons Treasury Select Committee, said: ‘Sir Philip Green and his family have made millions out of BHS and its hard-working staff. He took over a company with a healthy pension pot, yet when he sold BHS a black hole had appeared in its fund.’

The Guardian has calculated that Green and his family collected £586m in dividends, rental payments and interest on loans during their 15-year ownership of the retailer. 

 

What is the pension protection fund and what does it do? 

The Pension Protection Fund 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.

What does it offer:

1) If you were retired and over the scheme’s normal retirement age when your employer went bust, and receiving your pension then the Pension Protection Fund will generally pay 100% level of compensation.

2) If you retired early (except through ill-health) and had not reached your scheme’s normal pension age when your employer went bust, then you will generally receive 90% level of compensation based on what your pension was worth at the time. The annual compensation you will receive is capped at a certain level. The cap at age 65 is, from 1 April 2016, £37,420.42 (this equates to £33,678.38 when the 90 per cent level is applied) per year.

3) When you reach your scheme’s normal retirement age, you will be paid compensation based on the 90% level subject to a cap, as described above.

With all of the above, payments relating to pensionable service from 5 April 1997 will then rise in line with inflation each year, subject to a maximum of 2.5% a year. Payments relating to service before that date will not increase.

What it doesn’t offer:

Flexible drawdown, self-management or the ability to transfer.

For all of you that are members of a company pension scheme, if you haven’t done so already, it is time to find out if the pension scheme is fully funded; that means it has enough money to cover its pension liabilities or if it is in deficit. If it is in deficit you need to know by how much, what the company plans are to rectify this and, most importantly, how stable/safe the company you work or used to work for is. Is there a real possibility that the company could fail?  If so, I would seriously consider transferring your pension out of the scheme if you are able to.

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Yes, we DO sell you something – Peace of Mind!

Woman relaxingIn a world where our financial stability impacts almost every aspect of our daily lives, it is more important than ever to preserve what we have worked so hard to achieve. Unless you’re lucky enough to win the lottery, most of us have worked hard and for a very long time to achieve financial security and the lifestyle we want for ourselves and our families in retirement.

We all remember Robert Maxwell and the Mirror Group pension scandal in the early 90s when innocent working people woke up to the horror that their pension contributions had been used to subsidise his failing empire. The same happened when “Sir” Philip Green sold BHS for £1 in 2015, and this confirmed that even some of the biggest household names cannot be trusted with our retirement funds and financial future.

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One of the biggest challenges that expatriates confront when moving abroad is the complexity of expat finances. According to HSBC’s Expat Explorer Survey, 75% of respondents (9,288 respondents worldwide) say that their finances have become more complicated since they left their home country.

Compounding this, many expats don’t consider all aspects of their finances before, during and after moving abroad, therefore making organising their finances even more complex than it needs to be. What are the common mistakes seen time and time again?

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