Pensions and Quitting Your Job
After reading this:
- You'll learn about some of the options available for your pension after quitting your job
- You'll be able to contact authorities who give professional advice about what to do with your pension
: This article relates to pensions in the UK only
As there's so much money tied in your pension, it's unlikely that you'll want to overlook what happens to it when you're quitting your job. There are a number of options. If you're young and optimistic, you might decide to take the cash and run. However, if you're intending to retire with a healthy pension, you should make sure that you keep contributing to a scheme whether it's a personal or occupational pension.
What happens if I'm quitting my job?
Your scheme will have procedures in place allowing you to get a statement of the value of your pension. If you change jobs, you can ask your present scheme to pay a cash transfer value on your behalf to another occupational or personal pension. Or you can leave what you already have in your present scheme and start a new scheme with your new employer. Seek advice from an independent financial advisor on which scheme will be best for you.
Directory of UK financial advisors
Your personal pension plan belongs to you, so you can take it with you if you change jobs. This is helpful if your work means that you switch employers often.
Who to inform and what to inform them about
If you're quitting your job you should tell the company providing your pension. You may also find it useful to tell your new employer that you have a personal pension. (This will help make sure that your National Insurance contributions can be correctly calculated.)
If your new employer runs an occupational pension scheme (often known as a company scheme), it will probably be in your best interests to join it. Most employers will pay money into a company scheme for you. As well as the pension itself, company pension schemes often offer other advantages. For example, your employer may give a lump-sum payment to your partner if you die before you retire. Or, you may receive ill health and disability benefits if you become seriously ill and cannot work. There are very few circumstances where you would be able to beat what's on offer from a company scheme.
If you join a company pension scheme that is contracted-out, you will normally stop making payments to your personal pension. But you will still have to pay charges. There may even be extra charges because you have stopped paying into it. As long as the company scheme is willing, it may be in your interest to close your personal pension and transfer it to the company scheme. Most personal pension providers will make a charge for doing this, so it is important to talk to your new employer, your adviser and your pension provider before you make a decision.
Making additional voluntary contributions to your pension scheme
An alternative to transferring your personal pension into the company scheme would be to convert it into a free-standing additional voluntary contribution ( FSAVC ) plan into which you can make extra contributions on top of any you make to the company scheme. Some companies providing personal pensions will convert them into FSAVC plans without charge. The company scheme should also offer a facility to make additional voluntary contributions ( AVCs ), often paying towards the charges associated with setting up the AVC scheme - which can make this option good value.
If you decide to join a company scheme which is contracted-out, the DSS will stop paying minimum contributions to your personal pension. Instead, both you and your employer will pay a lower rate of National Insurance contributions. You should also ask the company providing your personal pension for form CA1543 . Fill it in and send it to the Contributions Agency (Contributions Unit in Northern Ireland) at the address shown on it. The form tells the Contributions Agency that you have stopped contracting-out using an appropriate personal pension.
If you decide to join a company scheme which is contracted-in, the only payments that your personal pension will be able to receive will be the minimum contributions payable by the DSS. Once again, it is important that you speak to your adviser before you decide what is in your best interests.
Generally, those on low earnings or close to retirement would be better off in SERPS (the lifetime earnings-related pensions scheme run by the government). What is best for you will depend on your personal circumstances and the number of working years you have left. You should talk about this with your adviser.
Before making a decision, talk to your financial adviser and your new employer.
What to do if you've lost or forgotten your pension details
What about if you've had a pension in a previous job but no longer have the details, can anyone help? The Pension Schemes Registry should be able to assist you. The more details you are able to give the more likely it is they will be able to trace the scheme. They have details for around 200,000 schemes.
The Pensions Schemes Registry
PO Box 1NN
Newcastle upon Tyne NE99 1NN.
Phone: 0191 225 6393/4
Also, there is an online facility which will start the ball rolling when trying to unearth details of a past pension scheme in your name, here: https://www.ntd.co.uk/opra/regform.asp
Other useful addresses and telephone numbers:
Call the on 0345 31 32 33
11 Belgrave Road
London SW1V 1RB.
Phone: 0171 233 8080
http://www.opas.org.uk/
11 Belgrave Road
London SW1V 1RB.
Phone: 020 7834 9144
Invicta House
Trafalgar Place
Brighton
Phone: 01273 627600
http://www.opra.org.uk /
11 Belgrave Road
London SW1V 1RB.
Phone: 020 7828 9794