Pension Insurance Corporation: what it means if your pension moves to PIC

Pension Insurance Corporation (PIC) insures defined benefit pension schemes; if your trustees buy out your scheme with it, PIC pays your pension.

What is Pension Insurance Corporation?

PIC says its purpose is paying the pensions of former members of UK defined benefit schemes, and it describes its business as specialising in insuring the pension benefits of those schemes. You do not pick PIC yourself: the deal is agreed by your scheme's trustees. If you also have a defined contribution pot to decide about, Pension Wise offers a free appointment that is impartial and backed by government. Curious how PIC's payments mesh with your savings? An FCA-authorised adviser weighs that up with you, free, after a quick go at the form on this page.

Despite the name, PIC is an insurance company, separate from your old scheme and your employer. For why trustees insure a scheme at all, see what pension risk transfer is.

Why has my pension moved to Pension Insurance Corporation?

Your scheme's trustees bought insurance from PIC, in one of two forms. The Pensions Regulator describes a buy-out as a complete risk transfer, subject to certain residual risks, in which an insurer becomes directly responsible for paying members' pensions, after which the scheme can be closed down and its ties to the employer cut. PIC puts the effect on you this way: it becomes responsible for paying your pension and you become a policyholder of PIC.

A buy-in is narrower. PIC says it typically covers a specific section of the scheme, as determined by the trustees. The regulator adds that the insurer pays an income to the scheme, and the trustees remain legally responsible for paying the member. So after a buy-in the scheme still owes you your pension, and PIC's income goes to the scheme.

For a buy-out, the regulator's guidance says members should be informed that the insurer is taking responsibility for paying their benefits, so expect to hear from your trustees. The final salary pension guide covers how your original scheme worked.

How do I contact PIC or see my pension online?

PIC lists what you can expect once your pension moves to its administration team: free-to-call phone lines and access to your pension information through its online portal, Member Zone. After a buy-in the trustees stay legally responsible for paying you, so ask them who will run your pension day to day.

Start with the letter or welcome pack you were sent, which should name your administrator. PIC's page for new policyholders has a contact section. For the PIC policy itself, ask the trustees or PIC; an FCA-authorised adviser, contacted via the enquiry form here, can cover the wider picture without charging you.

If someone rings or messages you unexpectedly about your pension, use contact details from your letter or PIC's own site instead. The pension scams guide explains the warning signs.

Can a buy-in or buyout change your options?

The regulator notes that buy-ins may affect discretionary benefits, and that member options such as cash commutation and transfer terms might be affected by the terms of the risk transfer. If you were relying on one of those, ask the trustees or PIC what the policy allows. Pension death benefits explains how survivors' pensions generally work.

Is my pension protected with Pension Insurance Corporation?

PIC describes itself as authorised by the PRA, with both the PRA and the FCA as its regulators. It also says its regime is overseen by the Bank of England and requires it to hold a financial buffer known as regulatory capital.

Which safety net matters depends on the deal. Where PIC has only done a buy-in, your occupational scheme still owes your pension: the Financial Services Compensation Scheme (FSCS) says it cannot protect occupational schemes if they fail and points to the Pension Protection Fund, which protects members of eligible defined benefit schemes. After a buyout PIC owes your pension directly, so the FSCS position on pensions from UK-regulated insurers is the one to look at. It says it can generally protect them where they qualify as contracts of long-term insurance, paying 100% with no upper cap, but that it cannot confirm whether a specific plan qualifies and you would need to ask the provider, which after a buyout means PIC.

The annuity provider failure guide sets out the FSCS conditions in more detail, and are final salary pensions protected covers the scheme side.

Weighing a PIC pension alongside the rest of your retirement income

The FCA and The Pensions Regulator both take the view that, for most people, hanging on to a defined benefit pension serves them best. Taking money out of one is another decision altogether; transferring a pension explains the steps. If anyone suggests moving a guaranteed income into investments, remember that investment values can fall as well as rise and you may get back less than you put in.

Turning a defined contribution pot into a guaranteed income is a separate choice, covered in the pension annuity guide. For how another insurer describes the same business, see Legal & General pension risk transfer.

Quick answers for people whose pension is with PIC

Is PIC the same as my old employer's pension scheme?

No. After a buyout, PIC is the insurer paying your pension and the old scheme can be wound up. After a buy-in, the scheme normally carries on paying you.

Do I have to do anything when my pension moves to PIC?

PIC describes the move as your pension going to its administration team, with a portal and phone lines for questions. Keep the trustees' letter, and ask the scheme if you are unsure what was agreed.

Is PIC regulated?

Yes, according to PIC: it names the PRA as the body that authorises it and the FCA and PRA as its regulators.

Who do I ask about my own policy?

Start with PIC or your trustees. Put your phone number into the form here if you want a second opinion on how the policy sits beside your other income; the adviser who rings will not charge you.