Protection for Workplace Pensions in UK

There are regulations which help to protect your workplace pension. But, the amount of pension protection you get depends on which type of scheme you enrol in.

Defined Contribution Pensions

What are the concerns about protection for defined contribution pension schemes?

UK laws are protecting your pension even if your employer or your provider goes out of business.

If Your Employer Goes Bust

In most cases pension providers will manage defined contribution pensions, not employers. That means you will not lose your retirement fund if your employer stops trading.

If Your Pension Provider Goes Bust

Pension protection depends on whether the Financial Conduct Authority authorised the provider. If so, the Financial Services Compensation Scheme compensates situations where the provider goes broke.

Trust-based Pension Schemes

Your employer often appoints a trust to run your defined contribution scheme. These types of pensions are in fact called trust-based pension schemes.

In this case, even if your employer goes out of business, you would keep your pension. But, it is likely that you would not receive the full amount. This is because the members’ pots fund the running costs of the scheme, not the employer.

Defined Benefit Pension Plan

Your employer handles the money invested in a defined benefit pension. It is their responsibility to ensure each member gets the promised amount. As a rule the Pension Protection Fund protects your fund if your employer cannot pay your pension.

Note: Employers in financial trouble cannot use money in a defined benefit pension plan.

Pension Protection Fund

The ‘Pension Protection Fund‘ pays compensation to members of eligible defined benefit pension schemes. They will pay up if there are qualifying insolvency events in relation to the employer.

They protect cases where insufficient assets fail to meet Pension Protection Fund levels. In most cases they will compensate:

  • 90% compensation for those who are below the required age of the pension scheme.
  • 100% compensation for those who reach the required age of the pension scheme.
Pension Fraud, Theft or Bad Management

The Fraud Compensation Fund protect those who suffer pension fraud or theft. In some cases they can help you recover lost money. You may get compensation if there is a shortfall in your fund because of theft, fraud, or bad pension management.

Contact the Pensions Advisory Service or the Pensions Ombudsman to complain about the way they are managing your workplace pension scheme.


About Workplace Pensions: An overview of workplace, work-based, occupational, or company pensions.
Joining a Workplace Pension Scheme: All employers must provide a works pension scheme by 2018.
Payments and Contributions: Check what you, your employer, and the government pay into the pot.
Workplace Pension Management: The role of a pension provider and how they manage pension pots.
Changing Jobs: Find out what happens to your company pension if you change jobs or take leave.
Opting Out: Check your rights and the correct process for ‘opting out’ leaving a workplace pension.
Workplace Pension Helpline: Free information and advice taken from The Pensions Advisory Service.

Protection for Workplace Pension Schemes in the United Kingdom