What happens to my pension when I leave a job?

When you’re leaving your current role to pursue an exciting new opportunity, there is plenty to look forward to. You get to meet new people, challenge yourself in your career, and widen your network. But you may also be wondering what happens to your pension when you leave a job.

Making a fresh start not only means you look after yourself in the present but also it’s the perfect opportunity to prepare yourself for the road ahead. When you start a new job it is important to know what happens to the pension savings you have built up in your previous role.

Don’t worry, your pension will not disappear when you decide to leave a job – the pension pot belongs to you.

However, you will have several options once you leave, so it’s worth familiarising yourself with them. Here are some handy hints to give you much deeper insight into the world of pensions.

Keeping track of your pensions

As of 2018, the government made automatic pension enrolment mandatory for all businesses, which means they have to sign you up to a scheme provided you’re an eligible jobholder.

This makes keeping track of all your current pensions incredibly important, as you may have more than one if you’ve worked for multiple employers or you’ve chosen to open a private pension.

Starting a new job is a great time to check on the current statuses of all your old pensions and review their value.

Most pension providers will send you annual statements, and you can reach out directly to them if you need to. The information included within these statements that you should keep track of are as follows:

• The value of your pension pot (what it was at the start and end of the year)
• The contributions paid into your pot (this could be from you and your employers)
• Tax relief details (all paid by HMRC)
• Investment losses or gains
• What has been transferred from one pension to another
• If anything had been deducted from contributions (fees, for example)
• An estimate of your final income once you reach retirement

Don’t worry if you can’t find your pension or don’t know who the provider is; the government has a free service available to help you track old pension pots if you aren’t sure where to start looking.

Can I transfer my workplace pension to a private pension?

When starting a new job you may want to transfer your existing pension over to a new scheme, such as a SIPP (Self-Invested Private Pension) or keep your old one in addition to your new auto-enrolment. Some pension schemes offer unique benefits, so it’s important to check what the benefits are before making any changes.

If you decide to transfer into a new scheme, you should also consider consolidating your old pensions. With iSIPP you can transfer the pension from your old job to one easy to manage SIPP. In fact you can bring all your old pots together in your iSIPP and manage your money from one place.

What is pension consolidation?

Pension consolidation is when you of combine all of (or most of) your existing pensions into one centralised location for your convenience.

Choosing to combine pensions could be the ideal option for anyone wishing to save themselves both time and money, and have increased flexibility when it comes to  investment options.

At iSIPP, we’re big believers in pension consolidation, and we have the expertise to help you take control over the future of your money. If you want to know more about how exactly we can support you, click here.

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.

This notice cannot disclose all the risks associated with the products we make available to you. When making your own investment decisions it is important you understand that all investments can fall as well as rise in value and it is possible you may get back less than what you have paid in. You should also be satisfied that any investments you choose are suitable for you in the light of your circumstances and financial position. You should seek financial advice if you are not sure of what’s best for your situation.