I am about to be made redundant and I have a pension with my employer. I have been told that my money purchase plan pension is to close yet I have received no further details. Can you give me an idea of what implications this may have on my pension? i.e. Can I be forced to transfer the pension? Will I get a financial incentive to transfer the pension etc..
Wind ups do not affect money purchase schemes in the same way as they do defined benefit schemes. However, money purchase schemes generally do not contain guarantees as to what you will get when you retire and your eventual pension will depend on the investment return achieved and annuity rates when you retire.
Upon wind up of the scheme you are most likely to receive an option of a cash lump sum depending on the size of your pension pot/ the length of your membership; the option to continue with an individual pension contract or to transfer your funds to an alternative pension arrangement such as a personal pension. Whether you are offered financial incentives will depend on the scheme rules, although these are more prevalent when an employer is trying move final salary members to a defined contribution scheme (i.e. winding up a final salary scheme).
It's important that you speak to your employer ASAP and seek advice from a financial adviser with regard to your pension. If you do not have one then your employer may give access to one as part of the redundancy proceedings.
I hope that helps
Money to the Masses
Looking for a financial adviser near you?
Do you need financial advice? An independent financial adviser can show you how to make the most
of your money. Find your nearest qualified and regulated adviser using this VouchedFor search tool.
Alternatively, Hargreaves Lansdown, one of the UK’s largest firms providing restricted financial advice, is offering a £200 John Lewis voucher* to new clients.