Silly question but what happens when you change employer?

turnitround

My nephew has just asked me the question and Im long retired and never had a workplace pension so have no idea of the answer.

He has been with same employer 9 years and has paid into a workplace pension. Now he has started a new job. Does the pension transfer to the new employer to be added to or does it just sit dormant till he gets to retirement age?

liz_bartun

It doesn't transfer automatically. But if his new employer happens to be with the same pension provider as the old employer, he should get a "welcome back" letter and his contributions will go into the same pot.

Dazed_and_C0nfused

And it shouldn't be "dormant". 

It will increase or decrease in value depending on what he has chosen to invest in within the pension wrapper.

Bimbly

If the new employer uses a different provider, he will start a new pot with them and the old pot will continue to stay invested.

It almost certainly will be possible to transfer the old pension to the new provider if he wants to. This is not necessary and may/may not be a good idea and is quite likely not to make much difference. But if your nephew ends up with several pensions in different places, make sure he tells each one when/if he moves home so he can keep track.

MX5huggy

We’re presuming that both pensions are Defined Contribution schemes. If either schemes are Defined Benefit (final salary or public sector schemes typically) then there are different options and in particular just 12 months to take advantage of transferring into the new scheme. 

Marcon

liz_bartun said:

It doesn't transfer automatically. But if his new employer happens to be with the same pension provider as the old employer, he should get a "welcome back" letter and his contributions will go into the same pot.

Very unlikely, unless the provider is NEST. Otherwise he'll have a new policy in respect of his new employment. 

Zerforax

It's usually worth checking what the annual management charge is on the different pensions. Sometimes an employer will have a better rate, sometimes if you leave, you go onto a higher charge as no longer an active employee. I'm currently planning on merging 3 workplace pensions because my new employer offers the lowest AMC.

Perhaps there are other stuff to factor in but I don't actively manage my pension investments.

Marcon

Zerforax said:

It's usually worth checking what the annual management charge is on the different pensions. Sometimes an employer will have a better rate, sometimes if you leave, you go onto a higher charge as no longer an active employee. I'm currently planning on merging 3 workplace pensions because my new employer offers the lowest AMC.

Perhaps there are other stuff to factor in but I don't actively manage my pension investments.

From April 2016 charges in a DC scheme for both active and deferred members must normally be the same (although as always, there are exceptions!).