A Defined Benefit Pension, AKA a Final Salary Pension guarantees to pay its members a defined amount per year, for life. However, it’s a common concern “What happens to my Defined Benefit Pension if my employer goes bust?”

The answer is that it depends on the circumstances and what is agreed between the Pension Scheme Administrators and its members and/or whether there is any government intervention. The likely outcome is, if your Final Salary Pension Scheme is eligible, that you may be protected by the Pension Protection Fund (PPF) which acts as an insurance policy should your employer’s pension fund get into trouble or if the business goes bust in the future. You’ll generally receive a maximum of 90% of what your pension was worth at the time, up to £34,655.05 per year, a figure set by the Department for Work and Pensions (DWP). 

You can find out more on the Pension Protection Fund website or read our blog post What is the Pension Protection Fund