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Why workplace pensions schemes are closed or frozen

Your workplace pension scheme may be closed or frozen in the future because it doesn't have enough money to pay pensions when they're due. For example, if the total value of your workplace 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 members' contributions so far)

Whoever looks after your workplace pension scheme is responsible for making sure it does not run out of money.

However, if your workplace pension scheme does run out of money then whoever runs your scheme can either:

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

If your workplace pension scheme is closed to new members

If you are already a member of your workplace 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're a new worker ask your employer if they offer access to any other type of pension scheme.

• Enrolling into a pension at work

If your workplace defined contribution pension scheme is closed

In defined contribution pension schemes, money is paid into a pension pot which belongs to you. The amount you get is based on the contributions paid in and how well the investments have done. You can use this money to buy a retirement income when you retire. See the link 'Types of workplace pension schemes' to learn more about 'defined contribution pension schemes'.

Occasionally, an employer may tell you that they want to close its pension scheme. If this happens, your employer may want to transfer your pension to another pension provider or arrange for you to become a member of another type of workplace pension. For example, a group personal pension or a stakeholder pension scheme. This is sometimes known as a 'buy out'.

• Types of workplace pension schemes

• Employers' workplace pension obligations

If your workplace pension scheme is frozen

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

If you're a member of the workplace pension scheme, whoever runs your pension scheme will tell you the value of your pension at the time it was frozen.

Why workplace pensions are wound up

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

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

If your workplace pension is wound up

If the workplace pension scheme is being wound up, whoever runs it must fully explain why. They must also keep members up to date on a regular basis. What happens to your workplace pension scheme will depend on why it has been wound up.

• Workplace pensions - what happens if it is wound up

Where to get advice

Workplace pension scheme trustees

Your workplace 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 workplace pension schemes are run. It can also investigate pension fraud and badly run workplace pensions.

• Contact The Pensions Regulator

Independent Financial Advisors

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

• Find an independent financial adviser Opens new window

The Pensions Advisory Service

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

• Contact The Pensions Advisory Service

Financial Services Authority (FSA)

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

• Contact the Financial Services Authority

More useful links

• Workplace pensions - what happens if it is wound up

• Winding up a company pension Opens new window

Useful contacts

• Money, tax and benefits contacts