Website of the UK government

Please note that this website has a UK government accesskeys system.

Public services all in one place

Main menu

Sunday, 30 October 2011

What to do if your company pension scheme is closed, frozen or wound up

Your company pension may be closed to new members, frozen (closed to all members), or wound up (fully closed down). Find out why this can happen and how this might affect you. If you need further advice, there are various organisations you can speak to.

Why company pensions are closed or frozen

Company pensions are usually based on your final salary and the number of years you have been in the company pension scheme.

Your company pension may be closed or frozen if it runs out of money. For instance, if the total value of your company pension scheme’s investments is less than either:

  • the amount it has to pay out now
  • the amount it is due to pay out in the future (which includes all the member’s contributions so far)

The trustees who look after your company pension scheme are responsible for making sure it does not run out of money. But if your company pension scheme does run out of money then the employer or the trustees can either:

  • 'close' the company pension scheme to new members – existing members can continue to contribute and receive a pension
  • 'freeze' the company pension scheme – closed to everyone and existing members' benefits will be affected (depending on the pension plan rules)

Your company pension is closed to new members

If you are already a member of your company’s pension scheme but it has been closed to new members then you should not be affected. The scheme will continue to run normally.

If you are a new employee you can ask your employer if they offer access to any other type of pension scheme, for example:

  • a company pension scheme that is based on your salary
  • a group personal pension plan (GPPP)
  • a stakeholder pension

But your employer does not have to contribute if you join either:

  • a group personal pension plan (GPPP) 
  • a stakeholder pension

If you join one of these pension schemes you're likely to receive fewer benefits than employees who are members of your company's final salary scheme. Most GPPPs have an employer contribution, although this is not compulsory.

Your company pension is frozen

Where a company pension scheme is frozen, no further contributions are collected from current members and no new members are able to join.

If you are a member of the pension scheme, your pension scheme administrator will tell you what benefits you have earned.

Your employer must then provide access to a new company pension scheme as they would for new employees.

Why company pensions are wound up

Winding up is a process that ends a company pension scheme. This may happen for a number of reasons depending on the company pension scheme's rules. These include:

  • the company has gone out of business
  • the company has merged with, or been taken over by, another business
  • the employer has permanently stopped contributing to the company pension scheme
  • The Pensions Regulator has directed a company pension scheme to wind up

If your company pension is wound up

If the company pension scheme is being wound up, the scheme’s trustees must fully explain why. They must also keep members up to date on a regular basis. Find out what happens to your company pension scheme – this will depend on why it has been wound up.

Where to get advice

Company pension scheme trustees

Your company pension scheme trustees can give you advice about your pension.

Pension scheme administrator

Your pension scheme administrator can answer specific questions about your pension.

The Pensions Regulator

The Pensions Regulator has powers to regulate the way that company pension schemes are run. It can also investigate pension fraud and badly run company pensions.

Independent Financial Advisors

It is important to get advice before making any decisions about buying annuities or transferring your pension. You can speak to an independent financial adviser (IFA) or The Pensions Advisory Service

The Pensions Advisory Service

The Pensions Advisory Service gives independent advice on general pension rules and regulations.

Financial Services Authority (FSA)

The FSA regulates the sale of pension products. You can find information about pensions on its website.

Was this information useful?

How useful did you find this information?

500 character limit
Your Privacy Opens new window

Why are we asking for this information?

  • we want to hear what you think about the quality and usefulness of our pages
  • your comments will help us improve our pages
  • your comments will also help with the future development of Directgov
  • telling us what you think will help make sure we give you the very best service

Access keys

If you would like to take part in our website visitor survey, please visit the site and then come back and select this link to take part in the survey.