Leaving Service - What Happens Next to your pension?

In today’s workplace, the days of a job for life are long since over. Many people will change jobs ten to fifteen times during their working careers. Their workplace pension can become a casualty of these frequent changes, with pension arrangements being made and removed on leaving the employer.

Most of the UK’s leading pension providers follow a standardised process which ensures that the former employee retains their benefits and ceases the pension relationship between themselves and their former employer.

At the time of leaving service with their current employer, employees will receive a leaving service pack which will confirm their options and most likely include a direct debit instruction to continue contributing to their pension personally.

The pension plan is converted by the provider into an individualised arrangement, and once this change has been made both the employer and their engaged financial adviser, both cease any liability or obligation to provide assistance to the former employee.

Starting a new job will most likely result in an additional pension being set up for the employee by their new employer. The employee can then choose to transfer the existing plan into their new arrangement or continue with two (or more) plans. This can create administration issues both during employment and at retirement.

Employee awareness and understanding is therefore vital to this process and it is the responsibility of the employer to ensure that the employee knows what comes next.

Robert Simmons

Corporate Pensions Administrator

Telephone: +44 (0)20 7893 3456

Email: contactus [@] broadstone.co.uk

The Previous Pension Minefield - A Survivors Guide

In today's modern workplace individuals change employer ever more frequently so that an individual may change employer numerous times during his/her working life. The days of a 'job for life' that the previous generations enjoyed are long gone.

In most cases, individuals moving employer have pension benefits with their former employers.

With pension transfers becoming more common, employees with benefits in old pension schemes from former employers may decide to transfer these benefits to pension schemes run by their current employer. This can serve to eliminate the additional administration that can result on an employee’s retirement.

In recent years, the Financial Conduct Authority and the Pensions Regulator have heavily scrutinised the area of pension transfers and have especially highlighted the need for good quality advice in this area.

Mindful of this need for greater transparency, many of today’s pension providers will not consider the transfer of benefits for any employee until they receive financial advice from an independent financial adviser. Others will not allow transfers without employer consent.

Employees may be unaware of the value of their pension ‘pots’ and the potential minefield that they may be stepping into when seeking to transfer benefits. Many previous pension schemes may have additional (hidden) benefits that may be lost on transfer to their current employer’s scheme.

As advisers, it is important for us to be mindful of these benefits when reviewing  the previous pension arrangement of a corporate employee and understand when a line is crossed from providing mere factual information and explanation and veering into the area of individual ‘advice’..

Robert Simmons
Corporate Pensions Administrator
Telephone: (0)20 7893 3456
Email: contactus [@] broadstone.co.uk