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What happens if your final salary pension scheme closes?

While 20 years ago a final salary pension scheme was very much the norm in the UK business arena times have changed and the outlook for the pensions industry is very very different. It has been reported today that one in four final salary pension schemes will close their doors during 2009 leaving many employees struggling to understand the implications and the potential loss of protection going forward. So where do you stand?

While it is essential that professional advice is taken as soon as possible regarding your pension arrangements if they are to change, the pension trustees of a final salary scheme are not able to take away your entitlement without your agreement. However, they may well switch future contributions to a money purchase scheme which puts you at the whim of the market with the potential for lower pension payouts in the future.

However, a number of pension schemes have gone one step further and approached members of final salary pension schemes with enhanced transfer values and gross payments to encourage members to switch to other arrangements. While some of these opportunities may look attractive at first glance, again, it is essential that professional advice is taken and you are aware of the implications for the short, medium and longer term.

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