Do you lose your pension if you get fired?

Various thoughts will fly through your mind if you’re unfortunate enough to be fired. Where will you find another job? What will you do for money? How could it affect your mental health? Even with so much going on, there’s another question that needs answering: Do you lose your pension if you get fired?

What happens to your pension if you’re fired from your job?

Workplace pension schemes are compulsory for employers to provide to eligible workers. If you are aged between 22 and the current state pension age, and you earn annually £10,000 or more, you will be enrolled in their pension scheme. The result: you will make regular contributions to your pension pot.

As a result, if you are fired from your job, this will understandably cause a disruption to your pension. Pension contributions will stop for a start, while your pension benefits can also suffer a reduction in value.

Yet what about the big question? Do you lose your pension if you get fired?

The good news: no, your pension is not lost. Whether it is a fair or unlawful dismissal, your pension will remain. If payments are no longer made into it, it is referred to as an “old pension”. This simply means they are dormant and don’t receive any further contributions.

What happens if you are unlawfully dismissed?

To reiterate, your pension is not lost if you are dismissed – unlawful or otherwise. However, it can result in a reduction in your overall pension pot. This is the case if you struggle to find new employment where you can begin to make new pension contributions.

If you believe you have been unlawfully dismissed from your job, it is possible to take your case to an employment tribunal. When the tribunal goes in your favour, it is possible for your pension loss to be rectified. This means if your unlawful dismissal hadn’t happened, you would gain the same pension level as if you were still in employment.

What should you do if you are lawfully fired?

Okay, there is no option to reclaim any lost pension if you are lawfully fired. The best step is to try and find new employment as quickly as possible. Doing this minimises the number of pension contributions you ultimately miss out on.

However, it is wise to take care of your “old pension” from your prior job. In fact, it is recommended to do this for any old pension you have accumulated in the past. A lot of people will often have several jobs over their lifetime, and this results in several old pensions. Rather than have all of these split up across multiple plans, you should combine them all into a single pension plan or pot.

This can be done with iSIPP. As well as being able to conveniently put all of your pension pots into one place, iSIPP can also help you in tracking down any old pensions you’re struggling to uncover. We can contact old pension providers and deal with the transfer process on your behalf.

Consolidating numerous pension pots makes a lot of sense from a convenience point of view. Yet for that extra level of convenience, you should try and do this sooner rather than later once you have lost your job. After all, it’s best to approach your ex-employer as soon as possible for your pension details. If you leave it later down the line, you could struggle to gather the details you need to seamlessly move your old pension pot over into a single plan.

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Pension contributions for the self-employed

Disclaimer 

The content of this article is for general information purposes only and should not be construed as legal, financial or taxation advice. You should not rely on the information contained in this article as legal, financial or taxation advice. The content of this article is based on information currently available to us, and the current laws in force in the UK. The content does not take account of individual circumstances and may not reflect recent changes in the law since the date it was created. It is essential that detailed financial and tax advice should be sought in both jurisdictions and any legal advice, if required.

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