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Is Your Pension at Risk? BHS & Brexit Woes

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Turning 65 used to be something to look forward to, with the promise of mandatory retirement and a future of endless holiday. However in 2016, senior citizens who are most reliant on pensions face a worsening funding gap, more so since the Brexit vote.

Amidst all this has been the collapse of retail chain BHS, which has revealed a huge pension deficit, threatening the pensions of thousands of employees. Lots has been reported on in the news and so here’s my analysis of what it all means and ultimately answer the question of “Is my pension at risk?!” and how BHS and Brexit could have an impact on this.


The Pension Deficit – What does it mean?

The announcement of Brexit has had a significant impact on the combined deficits of all UK pension schemes that have a defined-benefit, whether this be an employer-sponsored scheme or one promising a specific monthly payment or benefit upon retirement. The deficit rose from £820 billion to £900 billion overnight following the referendum and has since grown to a record £935 billion as of July 1st.

The Pension Protection Fund (PFF) also recently estimated that 4,995 final salary pension schemes currently operating are in deficit, with only 950 in surplus! Whilst a scheme in deficit does not necessarily mean that it will collapse, it does mean that businesses have to keep a close eye on them.


The Impact of Brexit

In addition to raising the overall pension deficit, it has been argued that the Brexit vote could further impact the economy, with the probability of a recession in the UK jumping to 40% following the vote.

This could have a significant impact on pension schemes. A weaker economy as a result of a recession would mean companies would be less able to afford extra contributions to a pension scheme, which could then threaten future pay-outs to pensioners.


BHS – Pension or Poverty?

The reveal of retail chain BHS going under has resulted in many arguments for stronger rules to protect workplace pension holders, in light of the £571 million hole in the former company’s pension scheme. It’s been argued that this burden was one of the reasons that BHS failed to find backers or buyers for the business as a whole.

Currently, The Pensions Regulator (TPR) has a key part in ensuring businesses pay present and future pensioners the amount they have been promised, and in the case of BHS, are expected to have made “significant progress” by the end of 2016. However, an economic slowdown could impact this significantly.



The announcement of Brexit and the problems that have arisen with BHS have called for action on pension regulations to ultimately make sure your pension is not at risk. At Stipendia, we are available to answer queries and concerns regarding this and the auto-enrolment process. If you have any queries or concerns, please contact us on 0845 308 288.


Please note that at the time of writing this, all information presented was current and up-to-date. As things develop, we will endeavour to bring you more information and content to keep you informed!

Key Contact: Lynne Auton
Tel: (0845) 308 2288
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