What happens to pension when change jobs?

Dr_Wu

Hi

Eldest daughter is leaving her job in the bank where she works and has contributed to the company pension scheme for 18 months now. (Value is around £4500)

She is starting a new job with another bank with a new company pension scheme.

Just wondering what happens to the old pension, does it carry on as a very small standalone pension, can it be transferred into the new scheme or cashed in?

Thanks in advance!

jamesd

Depends on the type of the old pension.

If it's a modern defined contribution scheme it can stay where it is or be transferred to the new bank or to a personal pension. Mentioning the value implies that it is this type. It's probably best to transfer it rather than leaving it where it is, just to keep life simple, because the amount isn't great. if it was larger there might be some value in looking at investment range and charges to see which scheme offers the best value. But for £4500 the potential gains aren't worth the hassle factor.

If it's a final or average salary scheme it can be left where it is but they might offer her the option of a refund of her contributions, or may insist on it. This would be just her contributions, not theirs, so she would lose money.

There's a plan being worked on where pots of under £10k would automatically move to the new job's plan when a person changed jobs if they were using the default investment options. Not around yet.

Dr_Wu

Thanks James

Pretty sure it's one of the modern defined contribution schemes. We'll just contact the scheme administrators and get them to transfer the pot over to the new one.

Linton

Dr_Wu wrote: »

Thanks James

Pretty sure it's one of the modern defined contribution schemes. We'll just contact the scheme administrators and get them to transfer the pot over to the new one.

You go to the new pension administrators and ask them to transfer in, not the other way round. Its much like transferring an ISA.

Pincher

Dr_Wu wrote: »

Just wondering what happens to the old pension, does it carry on as a very small standalone pension, can it be transferred into the new scheme or cashed in?

Oddly enough, I had a job for about 18 months in 1989.
They made us redundant just before Christmas.
As the pension was so short, they gave me the option to cancel it. It does mean that the company gets their 6% back, and I pay income tax on the salary refunded.


Just another way to go.

Dr_Wu

Pincher wrote: »

Oddly enough, I had a job for about 18 months in 1989.
They made us redundant just before Christmas.
As the pension was so short, they gave me the option to cancel it. It does mean that the company gets their 6% back, and I pay income tax on the salary refunded.


Just another way to go.

Useful info, thanks but she's 25 so we'll get the pension pot going asap and transfer in, odd to think of your kids having a pension!