What are my options for my pension when I change jobs?
You usually have 3 main options for your work pension when you leave your job:
- You can leave your pension where it is and do nothing
- You can transfer your benefits into your new employers scheme
- You can transfer the benefits from the old company into your own name using an account called a Personal Retirement Bond or a ‘Buyout Bond’.
Option 1: Leave it where it is:
This is usually the default option and it requires you to do nothing. It’s obviously the easiest option.
However, there are downsides to leaving it in the current scheme. By leaving it there, you have less control over the pension. You may have limited or no investment choices to choose from. And in some cases, the pension funds are shifted from being invested into cash when you leave a scheme, so the fund won’t grow. In fact, with inflation and charges, the value of the fund would fall each year.
Finally, what ongoing pension advice will you receive if you leave the pension in the employer scheme?
Option 2: Transfer the benefits into your new employer scheme
Most work schemes will allow you to transfer the benefits of your old pension into the new scheme. The benefit of transferring your existing pension into your new work scheme is that all your benefits are in one place and the fees and charges in some companies (particularly bigger companies) can be quite competitive.
However, this is something which we rarely recommend. Again, getting ongoing pension advice is often an issue (just like leaving the pension in the current scheme).
However, the biggest issue is that it limits your retirement options. When you add pensions from previous schemes into a new work scheme, all your pension funds are controlled by the rules of the new scheme. There are many cases where it may make sense to retire some of your pension savings earlier than others, and this won’t be permitted if you mix the funds together.
Option 3: Transfer the benefits into your own name
You can transfer the benefits into a pension account in your own name. This is called a Personal Retirement Bond or a ‘Buyout Bond’.
This allows you to move it away from the control of your previous employer. It’s also independent of your new employer
But by putting your pension funds into your own name, you have more control, you can get early access to the fund (from as early as 50 rather than the employer scheme’s retirement date which is usually 65-68) and you can compare the market to find the most competitive fees. You’ll also have access to a much wider range of funds to invest in.
Starting a pension in my new job
If your new employer has a pension scheme, it probably makes sense to join it if your employer will make ‘matching’ pension contributions. It’s pretty common for companies with pension schemes to match the contribution you make with an employer contribution e.g. if you contribute 5% of your salary, they will also contribute 5%. Details on the pension scheme (if they have one) will usually be included in your contract. If not, speak to your HR department.
If the company doesn’t offer matching contributions, you also have the option to set up a private pension or PRSA. We can help you with that. Just fill in the form below and we’ll give you a call.
If you have moved jobs, we’d be happy to explain the options
If you have a ‘Leaving Service Options’ letter, we can run through your options with you. Or if it’s been some time since you’ve left, we can help you get your options outlined by your old employer’s scheme. Just fill in the details below, call us on (01)8570655 or talk to us on Live Chat by clicking the icon on the bottom right hand side of this page.