Can a pension plan be taken away?

Your pension is likely one of the longest investments you'll have over your life. But is there a chance you could lose it? In this article, we'll look at a few different scenarios that could affect your pension, and what you can do about it.

Is my pension at risk?

Overall, a pension is a very secure way to save for your future. There are protections in place that guard your savings should your employer or your pension provider go out of business.

Depending on the type of pension you have, you may also benefit from the Financial Services Compensation Scheme (FSCS) - protecting up to £85,000 of your pot.

The exact body that protects your pot varies by the pension scheme. Most defined contributions pensions in the UK are regulated by the Financial Conduct Authority (FCA), while defined benefit schemes are looked after by the Pension Protection Fund (PPF).

If you're not sure what kind of pension you have, you can contact your pension provider who will be able to let you know - as well as what level of protection you are eligible to receive.

Beyond your pension risk from your employer or pension provider, there are other factors that have a knock-on effect on your pot. Here are a couple of other circumstances that could impact your pension savings.

The Financial Services Compensation Scheme protects up to £85,000 of your pension pot.

What happens to my pension if I go bankrupt?

Declaring yourself bankrupt will have an impact on your day-to-day finances, including what happens to pension. It's important you understand how this will work before you declare bankruptcy. How your pension will be affected will depend on:

• the type of pension
• if you've started withdrawing from your pot
• if you're able to withdraw from your pot within 4 years of bankruptcy

If you haven't started taking an income from your pension, and aren't eligible to within 4 years of becoming bankrupt, your pension fund won't be counted as an asset - your appointed trustee won't be able to claim any of your savings.

If you are receiving an income from your pension, you may be ordered to use some of these payments toward your debt. However, if your only source of income comes from the State pension, you won't be asked to use this.

Always get legal advice before declaring bankruptcy.

What happens to my pension after a divorce?

When you get divorced (or dissolve a civil partnership) any workplace or private pensions savings that you or your partner have is taken into account when dividing up your shared assets. Benefits built up for the new State Pension (which applies from 6 April 2016) can’t be split, although some parts of the old State Pension arrangements can. 

Pensions may be split (or shared) at the time of a divorce, or part of the pension might be ring-fenced for one partner to receive at retirement.

How is the Penfold Pension protected?

With Penfold, there are a number of safeguards in place to make sure you'll always be able to get your money back. Everything you pay into your pension is invested by our fund managers, BlackRock or HSBC, depending on which pension plan you chose.

The good news is that, should something happen to Penfold, your money is held by them, not us. This means you can simply transfer your savings to another provider - ready to access when the time comes.

Additionally, your pension is protected by the Financial Services Compensation Scheme (FSCS) should the investment manager fail, the government protects up to £85,000 of your money (just like with a bank account).

Penfold is regulated by the Financial Conduct Authority (FCA) which means that everything we do is subject to a wide range of controls and procedures - approved by the UK's financial regulator to keep your pension safe and secure.