UK - Executives in final salary schemes with future pensions greater than £25,000 per annum are being urged to switch to money purchase plans.
Alexander Forbes Financial Services points out that the Pensions Protection Fund only offers safeguards on the first £25,000.
Defined benefit scheme members with pots higher than £25,000, therefore, would receive no protection from company insolvency through the PPF.Corporate development director Robert Macgregor said by transferring to an insured defined contribution scheme, up to 90 per cent of the fund would be protected.
He said: “They may be surprised to find that DC can give them a higher level of retirement income security and predictability than their company scheme.
“In the post-Enron world no-one can be confident that their employer is rock solid. The government’s new legislation to protect members when an employer goes bust offers very limited security to those who expect a substantial pension.”
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