You can’t trust pensions

Given the various mis-selling scandals there have been in financial services around endownment mortgages – and more recently the banking crisis – it’s not surprising that some people are wary about saving in a pension. You might also have some concerns about changes to government policies, for example on taxation, that might impact on your pension savings.

The good news is that while there are no certainties in life, pensions is one of the best protected areas of all financial products.

If you are in a company pension scheme, the company has to set up a separate pensions fund that is ring-fenced from all other assets. In the event of a company going bust and this affecting the pension scheme, the pensions protection fund will offer  a degree of protection.

The state and government pension schemes are backed by the law and paid for by tax-payers – although obviously the amount paid might be varied by a future government.

Most personal pensions are issued by insurance companies who are very heavily regulated. While investment returns have varied in recent years (mostly downwards) there are no cases where an insurance company has failed to pay out on pension policies.

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