Pension pot promises ‘misleading’

Published: Saturday 21st February 2015 by The News Editor

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Some savers could fail to receive the full amount of what they believe are guaranteed company pensions, a government pensions body has warned.

The head of the Pension Protection Fund (PPF), which protects pension pots in the event of an employer going bust, said five out of six final salary-type schemes are in debt and might not be able to pay the expected amounts.

PPF chief executive Alan Rubenstein told the Daily Telegraph: ” It is misleading to allow people to expect promised pensions when in fact there is only money enough to pay about 60% of those pensions and where nothing is being done about the shortfall.”

The majority of people affected by the warning are workers in thei r 40s and 50s.

Mr Rubenstein added: “There is clearly a proportion of schemes which will never, ever meet their full benefit promises.”

The PPF pays retirement incomes to people who lose their pensions as a result of their company going under.

Under the scheme, savers who have not yet retired will receive up to 90% of the expected retirement income, up to an annual cap of around £30,000.

Most workers are not affected by the cap, but some high earners can lose significant retirement income if their employer goes bust.

Around 11 million people have pension savings in the 6,000 final salary-type schemes in the UK.

The pensions are often described as gold plated because they are designed to give savers a guaranteed level of pension income linked to their final or average wages.

Published: Saturday 21st February 2015 by The News Editor

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