Covid-19 (Coronavirus) has sadly had a significant impact on the employment circumstances and finances of many people across the UK; 11.6 million have been furloughed in part or full, and that doesn’t include the impact on the self-employed and other less visible groups. Some have been forced to take early retirement, others looking to ease their financial pressures have turned to their pensions to release funds or ease their predicament. Worried people seeking solutions and ways to maximise their finances are particularly at risk of being scammed.
Pensions have long been viewed as one of the more complicated aspects of personal finance and, despite a real commitment across the pensions industry to simplify information and communicate more effectively, there is still more that can be done.
As the government prepares to remove their financial support packages later this month, employees will understandably be concerned about the safety of their personal finances and pensions. These anxieties may lead to rushed decisions which could have a significant impact on retirement outcomes, and leave people vulnerable to scams. This is why it’s particularly important for employers in these uncertain times to help their employees understand their pensions, and the protections that exist if the worst happens to enable informed decision-making. Initiatives like Pension Awareness Week in September and Talk Money Week in November, led by the Money and Pensions Service, are great opportunities for employers to engage their staff. As with all things, education and knowledge are the greatest defence against being misled.
Many employees might not know, for instance, that there are robust pension protections that exist in the UK. Thankfully, the days when people lost their pensions when their employer failed are behind us.
At the Pension Protection Fund (PPF), we protect members of private sector defined benefit (DB) pension schemes in the event of employer insolvency. This means that any employees who have paid into an organisation’s associated UK DB pension scheme, whether current or former, will be protected by us if the worst were to happen. Our protection is also not determined by the health of the business or how long employees’ have paid into the scheme before retiring or moving to a new job.
We also administer the Fraud Compensation Fund (FCF) on behalf of the government.The Fraud Compensation Fund (FCF) is a compensation scheme that can pay compensation where an occupational pension scheme has had its assets reduced as a consequence of an offence involving dishonesty and where the scheme employer is insolvent and unable to make good the shortfall caused by the offence.
Businesses need to communicate the pension protections that are available for pension savers, and HR and talent teams play a key role in this. Through raising awareness, educating and reassuring DB pension savers about these ‘invisible’ employee benefits, employers are equipping them with the knowledge they need to make reasoned decisions about their financial futures which may safeguard them from becoming victims to scams.
Pension Protection Fund
