One in three defined benefit (DB) pension scheme members could have their pension rights covered by a buyout or buy-in by 2025, according to figures from LCP.
The firm noted that the proportion of the UK’s 10 million DB savers whose schemes had been backed by insurers has increased from fewer than one in 10 members five years ago, to around one in six members in 2020.
LCP warned that insolvencies were expected to rise over the next 12 months and noted that “many pensioners and workers face the risk that their pensions may not be paid in full”, due to employers going out of business while their scheme is in deficit and the scheme in question falling under the remit of the Pension Protection Fund.
Additionally, LCP pointed out that it was currently estimated that over £25bn would be paid over to insurers to buyout pensions across 2020.
LCP partner and buyout specialist, Imogen Cothay, said: “Millions of pension scheme members are blissfully unaware of all the activity that is going on to make sure their pensions are paid in full.
“Whilst most company pension schemes will deliver as planned, there is always an element of risk as for salary-related schemes, your pension is dependent on your former employer still being in business and able to make up any shortfall in the fund.
“The process of buyout involves securing pension payments via a deal with an insurance company which should give pension scheme members greater peace of mind.”
— to www.pensionsage.com