What happens to a pension when you move company?

As of 2018 it is compulsory for every company in the UK to automatically enroll its eligible staff in a workplace pension scheme.

As an employee, if your work status changes – for example if you’re changing jobs or you become self-employed – it could affect your pension.

What happens to my pension if I change jobs?

When you leave your employer, you do not lose the benefits you have built up in a pension and the pension fund belongs to you. As with all pensions, you have several options available to you when you leave your employment. If your scheme is a defined contribution pension, you can usually either leave the funds invested in the current scheme until you decide to draw on it at a later date. Or you can transfer it to a personal pension plan or to your new workplace pension, if the rules allow it.

Before you transfer a pension, you should consider whether you will lose any valuable benefits or features from your existing pension plan and also whether you will incur any penalties on your existing pension if you transfer.

Most of the new types of workplace pensions allow you to continue contributing to them after you are no longer working for the sponsoring employer. While you may be able to move your pension after leaving your employer, sometimes it is worth keeping it as the charges on workplace pensions are quite low and and with some in-house workplace pensions the costs are covered by the sponsoring employer.

What is important is to not lose track of your pension plans and to keep an up-to-date record to hand. It’s also important to ensure that the expression of wishes (where you state who will receive your pension funds if you die) is in place for each one of your schemes and to keep the pension provider informed of your new address when you move.

If you’ve changed jobs and remember paying into a pension at your previous workplace, it’s likely you’ll have an old pension there. You could find out more information about this by checking back through old payslips.

What if I have a defined benefit pension?

There are two types of workplace pension, defined contribution pensions and defined benefit pensions (also known as a final salary pension). Defined contribution pensions are the most common – most of those who are enrolled in a workplace pension scheme have this type. Their value is based on how much money you’ve paid into your pension and how your investments have performed.

Defined benefit pensions aren’t as common and are only typically offered to those working in big companies or the public sector. The value of these pensions depends on the number of years you’ve been a member of the scheme and your salary.

Because of the way these pensions work, transferring them is a very complex decision, which is why the regulators insist you get professional advice before transferring a defined benefit or cash balance scheme.

What happens to my pension if I become self-employed or stop working?

When you become self-employed or stop working, you have several pension options to save for your future.

• You might be able to keep contributing to your old workplace pension – check with the scheme provider.
• You could use the National Employment Saving Trust (NEST) – a workplace pension scheme that working self-employed people or sole directors of limited companies can use.
• You can set up a personal pension or Stakeholder pension (a simple pension with capped charges and limited investment choice).
• You could set up a Self-invested Personal Pension (SIPP). Almost any UK resident under the age of 75 can save into a SIPP. They usually offer a bigger range of investments than traditional pensions and they’re simple to set up and manage yourself online, so it makes it easy to choose how your retirement savings are invested: you can check out our award-winning Best SIPP and our self-employed pensions guide.*

We also have an insightful article on the impact on pensions from giving up or scaling back on work while bringing up children.

How can I find out all the pensions schemes I’ve paid into?

If you’re having problems keeping on top of all the pension schemes you’ve paid into, the Government website provides a Pension Tracing Service that helps you find contact details to search for a lost pension.

The Pension Tracing Service is free and can help you trace a pension you’ve lost track of. Please be aware that you need the name of an employer or a pension provider to use this service - this isn’t always straightforward, as companies and pension providers merge, buy each other and change names. You can also request contact details from the Pension Tracing Service by phone: 0800 731 0193.