Getting a new job is great news but comes with its share of challenges. It may involve a new role, a different commute, or even a total relocation. On top of this, there are also things to organise with your old workplace, like a handover meeting. But have you thought about what’s going to happen to your old workplace personal pension? Amongst all the excitement of changing jobs, it’s important not to lose track of your old workplace pension. Here are three areas you should check:
1. Keeping track
When it comes to retirement planning, it’s essential to know the value of your pension pot. This can be helpful when making future decisions involving merging pensions, or when thinking about your future income. Before you leave your current workplace, make sure your pension provider has your correct details – for example, is your login based on your work or your personal email address? This is extra important because your company’s pension provider might change. It is easy to lose track of which pension company has your old workplace pension and making sure they have the correct details helps everyone to stay in touch.
2. Check the pension fees
Once you leave your old workplace, you and your old employer will no longer be making contributions to your pension pot. However, the pension provider will continue to charge management fees. There is the real risk that your pension fund will be eroded by these charges, potentially leaving you with no money in this pension pot. It’s important to check that your pension provider is not charging you excessive fees. If they are, then this is one of the major reasons in favour of pension consolidation – merging pensions into one pension pot to avoid multiple fees and management charges. Remember, the longer you leave it, the more money you could potentially lose due to pension fees.
3. Check what type of pension
Finally, you should check what type of old workplace pension you hold. A defined benefit pension is often attractive, as it offers a guaranteed retirement income. However, this is the most expensive option for the employer, and you need to be confident that the company is secure enough to be able to provide this.
If you have a defined contribution pension, you should check where the funds have been invested. Like any other investment, personal pensions are invested in different ways – it could be a mixed asset fund, or a Self-Invested Pension Plan (SIPP). Different funds have different levels of risk, and it’s important that you are comfortable with this. This is a personal decision (although an independent financial adviser, like the team at Pension Works, will be able to help) and depends on your own attitude to risk and growth potential.
Thanks to auto-enrolment, many people have multiple workplace pensions, and your old workplace pension may be only one of them. Check our recent article on multiple workplace pensions for some further tips. A pension adviser, like us at Pension Works, regulated by the Financial Conduct Authority, will be able to give you independent advice on what to do with your old employer pensions and retirement planning.
To get free, impartial advice on old workplace pensions contact us today on 0808 164 2664. Or, to find out more about Pension Works, click here.