A business goes bankrupt

Impact on your defined contribution pension plan

If a business goes bankrupt, you will probably lose your job. In that case, no more contributions will be made to the plan by your employer (and you, if members made contributions) and you will not accumulate any more benefits (no new amounts will be credited to your account). In such cases, the pension plan will be terminated.

Impact of plan termination on your benefits

The pension fund is not part of your employer's assets. When the plan is terminated, all of your benefits (the amounts credited to your account) will be paid to you. Your benefits cannot be used to pay the creditors of the bankrupt employer.

Important!

If the employer assumed costs related to the plan, it is possible, indeed probable, that as a result of the employer's bankruptcy, the such costs associated with the plan's termination may be deducted from the members' accounts.

If the employer owes contributions to the pension fund, the plan administrator can make a claim to recover them.

It may turn out that unpaid contributions owing to the pension fund cannot be recovered and refunded to the plan members.