When you leave one employer, you don’t lose the benefits you’ve built up in your pension during the time you worked there – that fund belongs to you. But how do you find old pension pots – and when you do, should you move it all to a new employer, leave it where it is, or are there other options available? We explain it all in this post…
Locating old pensions
If you remember paying into a pension in a previous job, but didn’t do anything with it when you moved on, it’s likely still waiting there for you. You can see for sure by checking through old payslips, and if so, get in touch with your old employer. They’ll be able to let you know whether it was a scheme they set up and administered, or with a provider you can contact yourself.
They may need some information from you, so if you can, make sure you’ve got the following ready when you get in touch:
- your National Insurance number
- the dates you started and stopped employment there
- and if they’re different from the employment dates, the dates you joined and left the pension scheme.
If you can’t contact your previous employer, or think you may have held a private pension at some point and no longer have the details, you can use the Pension Tracing Service. It’s not always straightforward as companies and pension providers can merge and change over time, but it’s free, and provided on the government website.
Once you know all the different pension pots you have, there are several options available to you – depending on the types of pension they are.
What are the different types?
The most common workplace pension is a defined contributions pension. Most people hold this type of pension with their employer, and its value is based on how much you’ve paid into it and how the investments associated with it have performed over time. These pensions are pretty simple to transfer to other schemes.
Defined Benefit Pensions are much less common, and are usually found in very large companies, or the public sector. They’re also known as a final salary pension, and reflect the number of years you’ve been a member of the scheme, and your salary on retirement, rather than how much has been paid into it. Transferring these pensions is complex, and advice is essential before you take any action to move one of them.
What to do with them
One of your options, whatever the pension type, is to leave it exactly where it is. It will stay invested in its current scheme until you reach the age for drawing it. You may be able to keep contributing to it where it is, even if you are no longer working for that employer. Sometimes it’s worth keeping everything as it is, as the charges on workplace pensions are not high when compared with private schemes, and they may even be covered by the employer.
The alternative options are to move your old pensions into a personal, private pension plan, or to your new workplace pension. These are some of the choices available to you:
- A personal pension or stakeholder pension (this has capped charges, and more limited investment options)
- A Self-invested Personal Pension (SIPP), open to just about every UK resident under 75. They’re easy to set up and manage online, and offer a wide range of investment options.
- National Employment Saving Trust (NEST) – the workplace pension scheme that working self-employed people or sole directors of limited companies can use.
Before you do anything to transfer a pension, you should be sure that you’re not going to lose any of the benefits it currently carries, or any of the features it has. They may also be penalties to pay.
The most important thing is to know what you’ve got and where – and how to access it when you reach that retirement age.
What Next?
Speaking to a financial advisor is the best first step when considering your pension options. We’ve got access to up-to-date pension plan information, can help you find old pension pots, and consolidate them when appropriate. Give us a call today and take your first step towards a portfolio that works for you.
NB: The value of investments, and any income from them, can fall and you may get back less than you invested.