Most people will move jobs several times during their working lives – but what happens to your pension when you change jobs?
Your workplace pension will still belong to you after you’ve moved to a new job, and you’ll still have control over what happens to the money in that pension even after you’ve stopped paying into it.
In this guide, Finance Rate explains what happens to your pension when you change jobs and your options for managing and keeping track of all your workplace pensions moving forward.
What happens to my pension when I change jobs?
When you and your former employer stop contributing towards a pension, you can choose to do nothing and leave the money where it is. It will still belong to you and the pension plan will stay invested.
Remember: the value of investments can go down as well as up, and you may get back less money than was paid in.
However, there are a few other options available to you that might be beneficial depending on your circumstances.
Continue to make contributions
Some pension schemes allow you to continue making regular or one-off contributions after you’ve left a job. You might choose to do this if you’re concerned about your pension pot remaining static and how this could affect the value of your investment.
Speak directly to your pension provider if you’re unsure whether this is possible according to the terms of your plan.
Transfer the money
You may be able to move the money from your old pension scheme to one set up by your new employer, or to a personal pension that you’ve set up yourself.
Some people find it helpful to merge all of their workplace pensions together under a single plan for a number of reasons:
- Less admin: Merging your pension pots together means you’ll only need to let one provider know about any changes to your circumstances.
- Easier to track performance: It’s much easier to see if you’re on track for the retirement you want when all of your pension money is in one place.
- Lower charges: You could benefit from lower charges when you transfer your pension plans. This isn’t always the case though, so make sure to check your pension plan’s charges first.
Remember that merging pension plans will not be the right choice for everyone, and you could lose valuable benefits by doing so. Also, different pensions have different rules, so you might not be able to transfer the money in some cases.
While you won’t need to seek permission to complete any pension transfers, it’s a legal requirement to seek the advice of an Independent Financial Adviser if you’re thinking about moving a defined benefit pension worth over £30,000.
Get a refund of your contributions
If you’ve only worked for an employer for a short period of time, you might prefer to claim the amount you’ve contributed back so that you can invest the money elsewhere.
Some defined benefit schemes will allow you to do this, such as NHS and teachers’ pensions. These schemes will generally offer to refund your contributions if you worked there for less than two years.
If you’re curious about whether you’re able to get a refund of your pension contributions, get in touch with your provider directly.
What happens to my pension if I become self-employed?
If you decide to work for yourself after leaving a job, you’ll be responsible for setting up your own pension.
It’s easy to forget about setting up a pension for yourself when you’re preoccupied with all the other admin that comes with self-employment, but making sure you have one is crucial to ensure you have adequate savings when you retire.
There are plenty of pensions designed specifically for self-employed people that you might consider looking into if you work for yourself.
How do I find out if I have a workplace pension from a previous employer?
If you’ve had lots of different jobs, it can be very difficult to keep track of your different pensions, what they’re worth, and how to access them.
There are a few ways you can find lost pension plans:
- Look for the original paperwork or old payslips: If you still have the paperwork from when you joined the scheme and know where to find it, this should provide you with all of the information you need about your old pension plan. Old payslips should also be able to tell you the names of your previous pension providers.
- Get in touch with your old employer: If they are still in operation, you can contact your old employer and ask them who your pension provider was when you worked there.
- Use the government’s Pension Tracing Service: This service allows you to track down both workplace and personal pensions by entering the names and addresses of your previous employers, or the names of your old pension providers.
If you have several different pensions, you might want to consider merging them together (as discussed above) after you’ve successfully tracked them down. Just make sure the benefits of doing so outweigh the drawbacks.
Workplace pensions: Know your rights
All employers must offer a workplace pension scheme by law. It’s important to understand your rights to make sure you’ve not been treated unlawfully by your current or previous employers.
- If you’re eligible for Auto-Enrolment, your employer must enrol you in its pension scheme.
- If you don’t meet the criteria for Auto-Enrolment, your employer can’t refuse you access to its pension scheme. But it won’t have to contribute to your pension if you earn less than £520 a month, £120 a week, or £480 over a four-week period.
- Both you and your employer must make the minimum pension contributions.
- You’re allowed to opt out of a workplace pension scheme at any time and can claim a refund if you do so within one month of joining.
- You should never face any discrimination from your employer for either joining or remaining in a company pension scheme, and you should never be encouraged to opt out.
Pensions can be tricky to navigate, but that’s why Finance Rate are here to help. We provide free, unbiased information on all things pensions, helping you to stay on top of your retirement funds in the way that’s best for you.
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