What happens to my pension when I leave a company? (What you need to know)
What happens to my pension when I leave a company?
Does it get shared out between the remaining loyal staff?
Your pension remains your pension when you leave a company. Generally, it sits where you left it until you tell your company or pension provider what you want to do with it. It will likely stay invested the way you set it up until you take action to transfer or start accessing it in accordance with access rights.
So you have decided you can’t take it anymore.
It’s not you, it’s me! And I am leaving (or you are being asked to leave!)
But now that you are leaving what happens to that pension pot you have built up over several, days, weeks or years?
“Money, if it does not bring you happiness, will at least help you be miserable in comfort.”
Helen Gurley Brown
Do I have a pension?
If you worked at several companies, you do likely have a pension/s with all or a number of them – unless of course, you opted out in one way or another when you could do that.
The best way to track this down is through wages slips, P60’s, P45’s and any induction or contractual information. These documents should detail if any payments were being deducted and put into a pension or information about the company pension.
So, it might be time to do some life admin to find this info and order it into the companies you worked for.
“The trick is to stop thinking of it as ‘your’ money.”
IRS auditor
Auto enrolment pensions
From 2018 in the UK it became compulsory for every company to enrol their staff in a pension. This was called auto-enrolment. It would have happened to you if you were between 22 and pension age and earning over £10,000 a year.
The upside of this was that your company would add a small or larger percentage (FREE MONEY) to your pension contribution. You have to make a minimum of 5%, and they have to contribute a minimum of 3%
Any contribution you make also benefits from tax relief, i.e. you won’t be paying tax on that part of your income. So, another boost.
You can opt-out of a company pension, but you will need to review how this short-term gain in pay might lead to long-term pain later on when you have little or no pension savings.
“Money is the best deodorant.”
Elizabeth Taylor
What are the types of company pension?
There are two types of company pension.
Firstly a defined benefit pension. Where the benefits or payment at the end were defined, i.e. you would have a reasonable idea of what you would get in retirement. Usually based on calculating your final or average salary throughout your work.
Defined benefit pensions are very rare now as it has proved to be too expensive for companies to guarantee an income way into an unknown future and with people living longer and longer. A longer life being an inconvenience to the pension companies but better for you (providing you don’t run out of money)
Secondly, there are defined contribution pensions. This is more or less what it says on the tin. What you get at the end is defined by what you put in and the rate of return you get on your investments. In essence, this means the risk of the outcome has been transferred to you because the pension company does not promise anything anymore.
It’s still my pension when I leave the company, right?
Your pension remains yours whether you still work at the company or have moved on. The pension is in your name, not the company. Your pension should sit there until you decide what to do with it.
There might be some small nuances if you leave very early after starting, which may allow you to access or transfer the funds, but you would need to check with the company for what is possible.
The pension should still be yours when you leave the company.
This is why it’s essential to keep your paperwork up to date.
Your pension may be your life savings
It’s important to track and trace your pensions when you leave a company, as this may well be where most of your life savings are!
If you have worked for a few years or decades contributing to a pension, where you may have been more or less forced to save, you might be surprised how much you have.
If you have several pension pots after leaving companies, they may add up to more than you think.
If you lend someone $20, and never see that person again, it was probably worth it.
Author Unknown
Having your pension and eating it: cash out pension when leaving job
Find your old pensions
Get a piece of paper out with a pen/pencil, write down all the places you have worked and guess how long.
Dig out the paperwork for these old jobs. Payslips, P60’s, P45’s, contracts and job descriptions.
Track down the company HR contacts or primary phone number/website and see if you have a pension with them.
Your pensions are part of your net worth, everything you own – everything you owe and will likely play a bit part in a comfortable or otherwise retirement when you can’t or don’t want to work anymore.
GO AND FIND YOUR MONEY!!
Steps to find an old pension
| Steps to Find an Old Pension | Description |
|---|---|
| Gather Information | Collect any available information about the old pension, including the name of the pension provider, dates of employment, and policy details. |
| Contact Previous Employers | Reach out to previous employers and HR departments to inquire about the pension scheme and request information on how to locate it. |
| Check Pension Tracing Services | Utilize government-backed pension tracing services like the Pension Tracing Service in the UK. Provide relevant details to assist in locating your old pension. |
| Contact Pension Providers | Contact individual pension providers identified through previous employment to inquire about the status and location of your pension. |
| Review Old Statements and Documents | Review any old pension statements, correspondence, or paperwork you may have. They can provide valuable clues and contact information. |
| Seek Professional Help | Consider seeking assistance from a financial planner or pension specialist who can help trace and consolidate your old pension accounts. |
| Utilize Online Pension Finders | Explore online pension finder tools or websites that can assist in tracking down your old pension. Provide the necessary information for a search. |
| Keep Records Organized | Maintain a record of your search efforts, including dates of communication, individuals spoken to, and any progress made in locating the pension. |
| Be Persistent | Finding an old pension can be a process that requires persistence. Follow up regularly with pension providers and tracing services until the pension is located. |
Money isn’t the most important thing in life, but it’s reasonably close to oxygen on the “gotta have it” scale.
Zig Ziglar
FAQ: what happens to my pension when I leave a company?
If I leave a company what happens to my pension?
When you leave a company, your pension scheme will continue to be managed by your previous employer or the pension provider.
Your pension will remain invested in the scheme until you reach retirement age.
At that point, the scheme will pay out your pension according to the terms of the scheme.
If you join a new employer, you may be able to transfer your pension to a new scheme.
How do pensions work when you leave a company?
When you leave a company, your pension will stay invested as instructed until you request a change or reach retirement age.
At this point, the pension company will try to contact you so they can start making pension payments.
This is why making sure your pension provider has your correct details is so important.
What happens to my pension if I leave my job?
When you leave your job, your pension will continue to be managed by your previous employer or the pension provider.
The money you contributed to your pension scheme will remain invested until retirement age.
At that point, the scheme will pay out your pension according to the terms of the scheme.
You can usually transfer your pension to a new scheme if you join a new employer.
However, it is important to seek advice from a financial planner or coach before making any decisions about your pension.
If I resign will I get my pension?
When you resign from a company, your pension scheme will continue to be managed by your previous employer or the pension provider.
It will stay invested as you have requested.
At the time of your retirement age, they will start to make pension payments to you, so it’s important to keep them up to date with any address or bank changes.
Summary: What happens to my pension when I leave a job?
Your pension remains your pension.
You could leave it where it is or move it to your new company. You may need to seek financial advice on this.
Keep your financial paperwork neat and tidy, especially pay and pension statements so you can track down your pensions.
You can track down your old pension using the pension tracing service for UK residents.
Remember, your money is out there in your old pensions.
So the question of what happens to my pension when I leave a company depends on what you want to happen and what you actually do about it.
If you would like help with life playing and how to manage your money for a bright future sign up for our newsletter.
Need a Helping Hand with Your Finances? 🤝💰
If you’ve made it this far, congratulations! You’re already taking steps towards a healthier financial future. But maybe you’re feeling a bit overwhelmed. Maybe the thought of budgeting, saving, and investing still makes you break out in a cold sweat. Don’t worry, you’re not alone, and help is available.
At Financially Happy Money Coaching, I understand that money isn’t just about numbers. It’s about emotions, behaviours, and life choices. That’s why we’re here to help you take the stress out of money and build wealth in a way that aligns with your values and lifestyle.
Whether you’re just starting out on your financial journey or you’re looking to take your finances to the next level, we’re here to guide you every step of the way. I’ll help you understand your financial behaviours, set realistic goals, and create a personalized plan to achieve those goals.
So, why wait? Start your journey towards financial happiness today. Remember, the best time to start was yesterday. The second best time is now.
Click here to schedule your consultation and let’s make your money work for you, not vice versa. 💪💰
Remember, financial freedom isn’t a destination; it’s a journey. And every journey is easier when you have a guide. So, let’s embark on this journey together and create a financially happy future. 🚀💸
