Understanding if you have protection
We know that your workplace pension could be an important part of your financial future, and if you’re saving into this regularly, it could be one of your most valuable assets. With this in mind it’s important to know if, and how your money is protected if your employer was to go into administration, liquidation or close down.
In most cases the short answer is, yes, your workplace pension is protected.
The protection you get depends on the type of workplace pension you have. Most people who’ve been automatically enrolled into a pension are in a defined contribution scheme. This is where you, the Government and your employer pay a percentage of your salary into your policy. The policy is held by a pension provider, such as Scottish Widows and your money is invested with the aim of growing your savings for retirement.
The other type of workplace pension scheme is known as defined benefit. This is where your employer guarantees a certain level of income in retirement. It is based on your length of service and either final salary or average earnings.
If you’re unsure which type of pension you are in speak to your employer.