Pension options when leaving employment
In this video, I explain the options available to you with your pension when you leave a job. Generally, you have three pension options when you leave employment.
Options when leaving employment
- Leave it where it is
- Move your pension to a new employer pension scheme
- Transfer to a pension in your own name called a Buyout Bond.
Should I Leave your pension where it is?
Generally leaving your pension where it is, is only a good idea if the charges in the scheme are low. Alot of the time company schemes only have a limited number of fund choice options. By moving your pension you can access to a much wider range of funds.
Should I move my pension to a new Employer pension scheme?
If you decide to move your pension to a new employer pension scheme then you give up the right to access the benefits early. This is really only beneficial to make use of the two year leaving rule, which is if you have just joined new employment and your employer is contributing contributions into the scheme on your behalf and you left within two years then they can potentially take back the contributions that they made into the pension scheme and give you a refund of your contributions. However if you transfer your existing occupational scheme into the new one then your years of service from the old scheme carries over to the new one. Hence if you leave employment in the new scheme the employer can not take back their contributions as you will have over two years service.
Should I transfer my old pension into a Buy out Bond?
This is generally advantageous as it can open up a wide range of fund choice options to you, which should improve your chances of getting a better return on your pension. For Defined benefit schemes transferring over you now have the option of an ARF at retirement which you may not have had before. You also lock in the opportunity to take early pension drawdown from the age of 50.
This is not comprehensive advice and is just a snapshot of the options available. In order to make sure you take the correct option please make sure you talk to your financial advisor or email email@example.com if you want to get advice as everybody’s situation is different. There can be many variables like when do you plan to take retirement? Is the pension scheme defined benefit or defined contribution? What returns are you hoping to achieve and so on?