Workplace pensions: How to keep your savings when moving jobs

Martin Lewis explains benefits of workplace pension

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An average Brit will have around seven different jobs in their lifetime, usually leaving a trail of forgotten pension pots behind them. Savers have been encouraged to transfer their pensions when changing jobs or ideally transfer all of their leftover pots into a single personal pension, but few actually know how to do this.

In the majority of cases, workers are able to transfer their workplace pensions and simply checking the details of their company pension schemes will reveal whether it is possible. 

What many savers don’t consider is the fact that transferring a workplace pension doesn’t always mean moving it into another workplace pension. 

Depending on one’s situation and financial circumstances they may be able to transfer it into a variety of other possibilities such as:  

Private or personal pension 

Self-invested personal pension, known as SIPP.

Stakeholder pension

Switching pension providers 

Those deciding to use these options are advised to check their exit charges, transfer rules and set-up charges so as not to be blindsided by possible costs. 

Additionally, savers are advised to consider the benefits of their previous or current workplace pension schemes and whether these are transferable as well.

A transfer can also be much easier if a worker transfers their pot between different schemes under the same pension provider.

This is especially notable for those that may have two or more existing workplace pensions with the same provider as, in terms of management, it will be much easier to maintain with all of one’s funds in a single pot.

However, it is usually advised that savers get some professional financial advice before transferring their pension and the government insists that those with more than £30,000 in their pots seek this advice.

When it comes to actually transferring, a pension pot can greatly differ from person to person depending on their circumstances and pension scheme.

Typically, one should start their transfer by first finding out the details of their existing workplace pension and the one they plan to transfer it to. 

Special attention should be paid to the notice period on the old pension and that their new pension has all of their correct details before moving any money. 

Some workplace schemes require approval from pension professionals before any changes or transfers can be made.

There are a variety of transfer restrictions that may also apply depending what type of pension scheme one is involved in and where they intend to move their savings to. 

The most commonly restricted pots are those from certain industries such as police workplace pension, NHS pensions and teacher workplace pensions. 

Known as ‘defined benefit’ schemes, these workplace pensions generally have a range of benefits that are difficult to transfer. 

Additionally, due to the nature of government-supported schemes like these can only be transferred to a similar defined benefits scheme. 

However, it should be noted that charges can still apply and benefits that have been built-up in one’s previous pension scheme can be lost when transferring. 

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