How secure is my defined benefit pension?

Defined benefit pension schemes give you a guaranteed income when you retire. The amount of money you get is based on your salary and how long you worked for the company. 

Your pension will either be managed by your employer or an insurance company. It’s their job to make sure there’s enough money to pay everybody when they retire.  

To do this, they use a mix of investments such as stocks, shares, property and government bonds. 

To make sure there’s enough money to pay all pensions as agreed, a pension provider must:  

• appoint trustees to monitor their financial performance 
  
• meet The Pensions Regulator’s rules and guidelines, and  
  
• provide a full valuation every three years.
  

If there’s not enough money (known as a deficit), your employer and The Pensions Regulator will agree on a recovery plan, including the steps they'll take to get back on track and how long it will take. 

But, whatever happens, the pensions provider should pay you the agreed amount to date – either themselves, via another insurer or, as a last resort, the Pension Protection Fund (PPF). 

If you have a defined benefit pension and the company you work (or worked) for fails, the Pension Protection Fund (PPF) will step in. They will either: 

• check if there’s enough money for another insurer or provider to take over, or 
  
• run the scheme themselves (via compensation payments).
  

The switch to another provider, insurer or the PPF can take up to two years. 

Regardless of who takes over your pension scheme, you'll usually get all or most of what your pension was paying (or had promised to pay).

100% if you: 

• are already at or over your normal pension age 
  
• retired early due to ill-health, or 
  
• already receive a ‘survivor’s pension’ – where someone died before retirement age and their pension is paid to you.
  

90% if you:

• haven’t retired yet – but you might get more if another insurer takes over. 
  

This is based on the amount you had built up when your employer went out of business.  

See our guide on The Pension Protection Fund for more information.   

If you’re considering transferring out of your defined benefit pension, you’ll usually need to get regulated financial advice. They can tell you if it’s the right thing to do and recommend what to do next. 

Use our Find a retirement adviser tool to find a professional regulated by the Financial Conduct Authority.