P&O workers losing their jobs warned of risks that could wipe out pension pots
Hundreds of P&O Ferries employees who were laid off last month are at risk of reallocating their retirement savings to less generous alternatives, financial experts warn
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Laid-off P&O Ferries employees are urged not to make risky decisions that could reduce the amount of cash they are settling on.
Last month P&O ferries Hundreds of employees were fired via video call, and the remaining employees were ordered off the boats with just minutes’ notice.
Some of the laid-off employees are now at risk of making decisions about their decisions Pension according to the regulator Financial Conduct Authority (FCA), this could get in their pockets.
Many P&O employees have defined benefit or “DB” pensions.
These annuities provide a guaranteed, often very generous, payout retirement . They are also known as “final salary pensions”.
But now the FCA said it has “concerns” that some of those workers may be worried about their pensions and try to move them to new schemes.
This is accompanied by the massive risk that the new pension will be worse than the old one.
As a rule of thumb, almost no worker with DB pensions is better off switching, as most of these pensions are much better than modern defined contribution (DC) alternatives.
The FCA, along with the Pensions Regulatory Authority (TPR) and the Money and Pensions Service (MaPS), are urging all P&O staff to exercise caution.
A statement from the FCA said: “The FCA and TPR warn that moving out of a defined benefit pension scheme is unlikely to be in the best interests of most people.
“Savers concerned about their pensions or considering a transfer should seek impartial advice from MoneyHelper, operated by MaPS.”
The FCA also warned P&O staff of the dangers of taking bad financial advice about what to do with their pension.
Bad advice was given to many DB pensioners to switch to worse pensions by consultants who had a vested interest in promoting so-called “DB transfers”.
A well-known example was British Steel, where 47% of employees hold this position get inappropriate advice and another 32% received unclear advice.
About 8,000 steel workers, many from South Wales, transferred a total of about £2.8 billion from the company’s scheme when it was overhauled five years ago.
The FCA said: “Current and former P&O employees seeking financial advice should first check that the adviser is on the FCA’s register and their services include ‘advice on pension transfers and exits’.
“The FCA provides information on its website about what to expect from a consultation. On it, savers learn how to recognize and avoid pension fraud FraudSmart Pages.”
Different types of company pensions explained
Britons currently receive two main types of occupational pensions – defined benefits (DB) and defined contributions (DC).
DB pensions used to be very common.
But as life expectancy rose and investment returns fell, DB pensions began to die out in favor of less generous DC pensions.
Most company pensions are now DC.
But now a new type of pension is being introduced – the Collective Determined Contribution (CDC).
These are basically a middle ground between DC and DB pensions, but are said to offer better payouts in retirement than DC pensions.
In this country, Royal Mail staff are the guinea pigs for Britain’s first CDC scheme, which starts this year.
https://www.mirror.co.uk/money/po-workers-losing-jobs-warned-26746137 P&O workers losing their jobs warned of risks that could wipe out pension pots