Allowance Protection Fund
The Allowances Act 2004 established the Allowance Protection Fund to protect members of private area defined-benefit schemes whose firms become bankrupt with low funds in their pension scheme. In this circumstance, members can be reassured that they'll still receive most of the benefits and advantages that they were expecting.
The Annuity Protection Fund is a statutory fund run by the Board of the Pension Protection Fund, a statutory concern established under the provisions of the Act. It is funded in four ways: . An annual annuity protection levy paid by suitable pension schemes;
. Recovery of cash and other assets from ruined bosses of schemes covered;
. The moving of relevant scheme assets to the fund [*SCO]. Returns on PPF investments.
The PPF makes sure that when a company with an admissible defined-benefit allowance scheme becomes bankrupt (having began wind up after 6 April 2005) and its annuity fund is not sufficiently backed, compensation is provided so that members will still receive the core of the benefits to which they will be entitled. The PPF provides compensation in two areas, depending on the individual's status in the first scheme.
Folk receive 100 % of the pension in payment straight before the assessment date if they: . Have reached the scheme’s normal pension age; . Are below the scheme’s standard allowance age but in receipt of survivor’s benefit;
. Are below the scheme’s normal pension age but already in invoice of an allowance on the grounds of ill health.
To explain, this means that should an individual ask can I cash in a pension early that is held within the allowance protection fund?
The answer, is and always will be no. This manifestly will be a disenchantment to the majority of people. However, holding an allowance within the allowance protection fund clearly provide extra security and prevent the complete loss of the pension balance.
If you have any questions regarding pensions or financial advice, it is always recommended to seek expert fianancial advice from a financial adviser, who can put you on the right path for your financial future.
Author: Aharon DeansThis author has published 15 articles so far.