Changing job can be a difficult time. Often, when you are leaving one job you are transitioning to a new role, and this can be a particularly stressful time with new routines, people and responsibilities. While you are making the move, it can be easy to lose track of your pension and sometimes months or even years go by without a single thought to that previous occupational pension scheme.

There are several different types of pension plans you may have had from your previous employments. These include:

• Group Defined Contribution (DC) Pension Scheme
• Group Defined Benefit (DB) Pension Schemes
• Group PRSA Schemes
• Executive Pension Plans
• Individual PRSA (if less than 5 employees in employment)
• Personal Pension (if self-employed for instance)
• Overseas Pension Plan (if you worked abroad for a period of time)

Once you leave employment, there is an onus on your pension provider to be informed, and to provide you with a document called the Leaving Service Options letter. This document outlines your pension fund value (at that time) and the options available to you under the rules of the scheme. These rules will be set out in your policy certificate and corresponding documentation when your policy is set up. One of the main rules which will dictate your options is the vesting on the scheme.

Vesting

There are two types of vesting – statutory and immediate. This refers to how long you need to be a member of the pension scheme (not the company but the scheme itself) before you are entitled to both the employer contributions as well as your own (ie the employee) contributions. With immediate vesting, the employee is entitled to their employer contributions from the moment they join the pension. This does not mean they can take a refund or access the employer contribution, but it does mean that when they leave, they are able to transfer their employee and employer portions into their next pension arrangement. Statutory vesting is a common structure on a pension scheme, and it means that an individual is not entitled to access (transfer if they leave) their employer portion unless they have been a member of the scheme for at least 2 years. If your pension dates back to the 1990s then it is possible that pension is subject to a 5 year vesting period.

How do I find my old pension?

The first important point to make is that there is no timeframe for tracking down an old pension. Naturally, if it has been a long time since you left the company, it can be a little more difficult to track down particularly if a company has closed down, changed hands or merged. In some instances, a pension scheme will be ‘wound up’, so it may have changed to a different provider or different product type. Nevertheless, that pension will still be linked to you.

If you have any details about your old pension, then your financial adviser should be able to help you track it down. This could be the policy number, scheme number or even just the provider it was with. Your financial adviser can draft a Letter of Authority for you to sign. This does not give your financial adviser any power over the policy but does allow them to engage with the provider on your behalf and ask for a fresh Leaving Service Options document to be prepared. In some instances, a proof of ID will also be required. This Letter of Authority can also be used to track down pensions in the UK, although more details may be required (such as national insurance number) depending on the provider. If you already have your Leaving Service Options on file then these can still be used, although a more updated version may be better to accurately reflect your pension value. This could influence your decision with that to do next.

What might my options be?

So, you’ve managed to track down your previous occupational pension, and you’ve received your Leaving Service Options. What options are you likely to have? Well, firstly it’s important to note the following:

• If you’ve been an active member (in the scheme while you worked there) of the pension for less than 2 years you may be entitled to a refund, regardless of the vesting as outlined above. Otherwise, you can choose any of the below options (with your employee portion only). If you have been an active member for more than 2 years, then the refund option will no longer be available.
• If you have immediate vesting, then the below options are all available to you with respect to both your employee and employer contributions.
• If you’ve been an active member for more than 2 years you cannot take a refund, but the below options are available to you with respect to both your employee and employer portions.

Options

1. Remain a deferred member of the scheme. This is when your pension remains invested in that original scheme. You can no longer pay into it.
2. Transfer to your new occupational pension scheme as long as that new scheme is willing to accept a transfer in. Usually not available for UK pensions.
3. Transfer to a PRSA. This will be dependent on value, and how long you were active in the pension. There could be a requirement for a Statement of Benefit Comparison which can be expensive.
4. Transfer to a Personal Retirement Bond. This is essentially a “ring-fenced” pension in your sole name which is no longer held in trust by your previous employer, and one that you can no longer pay into. You can decide how future investment decisions are made which gives you a huge degree of ownership

Which is the best option?

There is no best option, there is just the best option for you. There are pro’s and cons to each of the above, and the best option for you will be dependent on your priorities. If you would like to access the pension from age 50, then remaining deferred or transferring to a PRB might be the best. If you wish to keep your pensions in the one place, then transferring into your new occupational pension scheme may suit you better. If you want to have more control over your fund choice, charging structure etc. then the PRSA or PRB might be the right choice for you.

Whatever type of pension you have from your previous employment(s), it is always best to contact an independent Financial Adviser so that you equip yourself with the necessary knowledge to make the best decision for you.

We hope you find this information useful and please don’t hesitate to email us with your query to info@olliemoranfs.com  if you have any further queries.