Nowadays, employees tend to change their jobs several times during their lifetime. If you worked in the public service or for a large employer you probably joined the pension scheme, once you had stayed with the employer longer than six months.
On leaving service, if your employment with an employer was less than two years, you usually took a full refund of your own contributions, less tax.
Anyone who moved jobs with more than two years’ service are prohibited by law from taking a refund of their own or the employers’ pension contributions.
The options available to employees on leaving service in such circumstances are:
- Leave the entire fund in the employer’s pension plan and take a reduced pension at normal retirement age – this is called preserved pension benefits.
- Move the entire proceeds to a new employer’s pension scheme – if there is one.
- Move the proceeds to a Personal Retirement Bond.
The majority of employees take the first option and a legacy of that is many employees now find that they may have a number of preserved pension benefits from their various employers. Each pension is probably quite small but collectively the total amount could be quite significant.
In recent years many employers have gone out of business; pension funds have lost value and some employees have lost their pension benefits.
Annual benefits statements, designed to assist you monitor your pension’s performance; appear to no longer be sent yearly, as required. In addition, our experience is that the administration service on dormant pension funds is exceedingly poor with even routine queries not being responded to for weeks and in some cases months.
Any member of a company paid pension can access it from their 50th birthday onward with the employer’s permission – this is called early retirement. The onus is on everyone to take charge of their own pension arrangement. You should not leave it to the trustees of former employers’ pension funds to look after your pension money and be sure to take independent professional pension advice about what your options are.