Introduction

If you leave your pension scheme, you do not lose the benefits you have built up. They continue to belong to you and you have several options for what to do with them. Your scheme administrator or pension provider should tell you which options apply to you. Most schemes will allow you to transfer your pension pot to another pension scheme, which could be a new employer’s workplace pension scheme, a personal pension scheme, a self-invested personal pension (SIPP) or a stakeholder pension (SHP) scheme.

You don’t have to decide straight away – you can generally transfer at any time up a year before the date that you are expected to start drawing retirement benefits. In some cases, it’s also possible to transfer to a new pension provider after you have started to draw retirement benefits.

Things to consider

Do you have a defined benefit or a defined contribution scheme?

– When you transfer benefits from a defined benefits pension scheme, you are not transferring the actual benefits but a cash amount, thecash equivalent transfer value (CETV). When the CETV is transferred, you give up all of your benefits in the old scheme. Advice should always be sort before making this decision as in most cases you are effectively giving up guaranteed future benefits. As of April 2015, in the UK it is a requirement to get advice before transferring from a defined benefit to a defined contribution

– If you are transferring from a defined contribution pension scheme, you will usually be transferring to another defined contribution scheme. The amount available to transfer to the new scheme is usually based on the value of your pension pot, although there may be charges for transferring. When the transfer is completed, the value of your pension pot in your new scheme will be its value before the transfer plus the amount transferred.

– You will need to choose how to invest the money transferred into the new scheme, so before transferring, it’s worth considering where you would like to invest and whether your choices are available in the new scheme. It’s unlikely that the new scheme will offer the same investment options as your old scheme. You should also check the level of charges that may be payable.

Summary

Leaving your pension scheme occurs when, for example you leave your employer, if you decide to opt out or stop making contributions. If you leave your pension scheme, the benefits you’ve built up still belong to you. You normally have the option to leave them where they are or to transfer them to another pension scheme.

Additional Information Resources

Additional information resources are available by clicking on the links below:

• Financial Planning
• Investments 
• Insurance 
• Pensions
• Tools & Calculators
• News

You can also view information related to your particular stage of life:

• Starting Out
• Growing Responsibility
• Nearing Retirement
• Retired