Pension Fund in Deficit

[Segilla]

I am an owner-occupier of a flat managed by a housing association. Their pension scheme was closed and over the past 3 years the deficit is increasing -now £30M.

What is likely to happen?

Will pensioners go without or get less than they were expecting, or can the association try to remedy the deficit by increasing service charges?

[factor-fiction]

Is there necessarily a link? It depends who directly owns the scheme and whethe rteh company wants to fund it.
Whether its pensioners will get less than they expected depends on factors such a swhat sort of scheme it is.

[Vivkins3]

I have NO faith in pension funds at all. I took out a pension with the Prudential in 1988 and have paid about 50 per month in ever since. The figures they were quoting were about £13,000 a year when I retired. The figure I am actually being offered now is around £1100. a year - thank goodness I have savings.

[Hymie]

In a worst case scenario, should the pension scheme go bust – the government will pick up the tab, but only paying you 90% of what you would have otherwise received, and this amount would not be indexed linked, once you retire. That is, whatever your fist monthly pension payment is – this will be the same for the remainder of your life.

Your employer should be taking steps to reduce this pension deficit. This will normally involve them paying extra into the fund – most companies in such a position will also reduce other benefits that were offered with the pension. Such as paying out much less to those opting to retire early, and limiting the inflation proofing to a lower maximum amount (say 2%, when inflation is currently running at over 5%).

Remember that once you reach retirement age – you can take up to 25% of the notional pension fund required to pay-out your pension (tax-free). The required fund can be 20x your annual pension – so if you had a £10k pension, your fund could be worth £200k, 25% of which would be £50k. Of course, in the above example having taken a £50k tax-free lump sum – your annual pension would be reduced by 25% to £7.5k.

[carrot99]

what does it say in your contract about the service charges?

[Segilla]

Thanks for input. I don't think I made it really clear that my interest isn't in the pensioners. It is about me and fellow residents who pay the managment company whose employees the pensioners were.

But it looks as if the abandoned pensioners will be partly compensated by the Government and not by money we residents will have to pay.