Carillion failure ramps up threat to final salary pensions

The liquidation of building firm Carillon has once again highlighted the urgent need to take advice on transferring your final salary pension.

It is the latest high-profile corporate failure to threaten workers’ pension benefits and follows the well-publicised plight of scheme members at BHS and British Steel.

Carillion’s demise is another potential blow to all final salary pension holders’ confidence that their employer will be able to sustain their benefits – and a good reason to take advice on their transfer options.

Transferring is not right for everyone. But it does move your money into a private pension where the capital becomes yours, and you have complete control over how and when to use it. Transferring also brings a range of other potential benefits.

600 more schemes likely to fail

This is part of a much bigger trend that is set to worsen. There are over 6,000 private sector final salary schemes in the UK. Around 880 schemes and 235,000 members have already moved into the Pension Protection Fund (PPF) due to the failure of the scheme. For members, moving into the PPF usually means having to take reduced benefits and a potentially significant hit to retirement income.

The government has predicted that a further 600 final salary pension schemes will fail and transfer 150,000 members to the PPF by 2030.

You may think your employer is unlikely to be one of these failures and the chances are it will not be. But Carillion was a large, apparently stable company whose demise was rapid and came as a shock to many.

Pressure on all scheme benefits

Even if your scheme employer does not fail, your benefits could still be at risk if, as many predict, the government changes legislation to allow existing schemes to cut benefit promises more easily. Carillion’s liquidation will only add to the increasing pressure on the government to do this in an upcoming white paper.

The paper could recommend giving employers more flexibility to switch to less generous annual increases for pensioners. For example, the government may make it easier for schemes to link benefits to a lower measure of inflation or even suspend inflation indexation entirely. This might help keep more schemes afloat but would reduce benefits for members, especially those that have not yet reached retirement.

So if you are in any way concerned about your future benefits, you should take advice on a potential transfer as soon as possible.

Specialist experience

Final Salary Transferwise is an initiative of independent adviser Blackstone Moregate, which has 17 years of specialist experience in pension planning. The team have a combined experience of 70 years.

To assess the suitability of a transfer, we conduct a thorough, holistic review of all your financial affairs, including your assets, income, background, goals and risk appetite.
Our specialist tools and technical skills will also help assess the sustainability of your retirement income throughout life, and ensure your money never runs out.

The result is a fully-informed, professional, transparent and personal recommendation about whether a transfer is right for you.

We also have investment specialists in our team. So if a transfer is right for you, we also make sure the new investments are right for you and explain them carefully to give you peace of mind.

As you may have read, the regulator is investigating whether some advisory firms have not given the best advice on pension transfers. Do not let this put you off seeking advice on this important and complex matter that could have a huge, potential impact on your retirement income.

Transferring has brought huge benefits to many of our clients already – read some of their stories by following the links on our homepage.

Given the mounting threats to future benefits, we recommend that all final salary scheme members explore the possibility of a transfer as soon as possible. Just be sure to choose a specialist advisory firm that is fit for the job.

To find out more, contact Richard Hopkins at 020 3376 1444,

Richard Hopkins

Richard is a founding director of Final Salary Transferwise, an initiative of Blackstone Moregate with considerable experience in financial services. Richard provides a holistic, professional and highly personalised service to help ensure his clients meet their financial objectives.

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