You will all remember the Mirror Group fiasco, with the loss of pensions for thousands of people. The Mirror Group scheme was a final salary pension scheme. With this type of scheme, the employer takes the risk rather than the pension member. However, what happens if the company goes bust?

This is why the Pension Protection Fund (PPF) was established by the government. This requires every pension scheme in the country to make compulsory payments to it, so that, if a company fails, then the PPF can make up the difference, or at least part of it.

This year, over £700m will be paid into the Protection Fund. This means that existing pension schemes will lose £700m in assets! At the moment, some 91% of schemes are in deficit, meaning that they don't have enough money to meet the pensions that are in place. This means that the employers will need to pay more into them, and this on top of paying out to the PPF.

The PPF, as at March 2008, has a deficit itself of over £517m because of the claims that it has received.

The protection that the PPF gives to pensioners is capped at £28,000 and, broadly speaking, covers 90% of the pension. However, this is not a guarantee, and it is important to remember this.

If you are a member of an occupational scheme where you are no longer employed by that employer, you should take a detailed look at the scheme and consider if you should stay with it or if you should transfer the funds out. There will certainly be more claims on the PPF and the real question is, how much can it afford to pay?