Keeping track of multiple pensions spread across different providers can be quite a daunting task, especially if you’ve had several jobs throughout your career. In this article, we’ll provide detailed guidance to help you understand whether it’s the right decision for you to transfer your own workplace pension.
A workplace pension is a savings fund that any employer will set up for you when you start working for them. The purpose of this is to help you gain some financial security when you retire. While you’re working for a company, money will be put into a savings pot for you each month, helping to ensure you’ll still have an income after you stop working.
Your workplace pension is usually built up by contributions from both you and your employer, but the specifics depend on a number of details, including:
Your savings are grouped together with other peoples' contributions and used to purchase units in a pension fund. This fund is then used to invest in things like stocks, commodities, property, and so on.
Most people today have several workplace pensions, each with different pension providers. This is very common because, according to a 2019 study, people change jobs around 12 times over their career. Obviously, keeping track of 12 different pensions isn’t easy!
By law, every UK company must offer some form of workplace pension. As a result, each time you join a new company, your employer will automatically enrol you into their own pension plan. So, unless you’ve manually opted out in the past, you’ll have separate workplace pension funds for every job in which you’ve been eligible.
Some people are happy to keep their pensions scattered across several providers, without much awareness of how much money they’re saving. But if you’re allowing your old pensions to just sit there in a generic plan, you’re probably not getting as much value as you could be.
It’s a wise move to get your workplace pensions organised, and have some control over where you’re investing, rather than just leaving it to chance. Otherwise, you could be losing out.
To solve this problem, it is possible to transfer your workplace pensions. This essentially means you take your pension from one provider and move it to another of your choice. This works by selling the investments in your pension fund and turning your savings pot into cash. This cash is then transferred to your new pension provider, before being invested back into your new plan.
However, it’s important to be aware that if you do this with your current workplace pension then your employer will stop contributing. You can transfer an old workplace pension into your new one, but you’ll have to do this again the next time you change to a new job.
The most beneficial approach is often to transfer all your old pension pots into your own private pension on the side, so it automatically comes along with you whenever you move to a new company.
Transferring your old pots into a private pension means everything comes with you - whenever you go.
Rather than juggling several different savings pots, it’s so important to find a simple, efficient way to stay on top of your workplace pension. A pension transfer will provide that for you, as well as a range of other advantages, such as:
Having a new pension fund opened for you every time you start work with a new employer makes the task of managing your pension far too daunting. This is especially true when considering that traditional pension providers tend to bury all your financial information under layers upon layers of processes and paperwork.
It’s also possible that some companies you previously worked for may change their pension providers, making it even more difficult to track down your information. A pension transfer is a great way to easily bring together all your pensions into one pot, removing all the admin and making it far simpler to manage.
If you want to increase the value you can gain from your savings, it will be useful to move away from the standard pension plans in which you’re currently enrolled.
Not only will a pension transfer give you full visibility into exactly how much you’re saving, but you’ll also be able to choose a plan that can help you earn more from your investment.
Choosing a new plan with the best possible rates will ensure you’ll start to see your pension performing better, helping you achieve your retirement goals more easily.
Another advantage to gain here is that you can find a plan with lower fees than the ones you’re currently attached to. This will give you the chance to make even more savings.
As your pension fund is essentially an investment of your money, it’s important to know exactly what you’ve invested in. It’s possible a past employer has your workplace pension on a default plan. This could mean you’re investing in areas that don’t align with certain ethics, values, or beliefs.
If that’s the case, you’ll benefit from transferring your pension from your current plan to a more ethical or sustainable option.
Of course, there are also some potential risks to be aware of when deciding whether to transfer your workplace pension or not.
You should always look carefully at the fees involved with your chosen method of transfer. If you have a small savings pot, the fees could potentially be higher than your pension fund itself. In those situations, it may not make sense financially for you to go ahead with a transfer.
Additionally, most pension funds appear to be low-cost up front by charging a low annual management fee, but they’ll actually include hidden admin fees or even charge you every time you pay in.
It’s best to find a provider that will only charge you one, all-in fee, with no hidden charges, to ensure you don’t get hit with any unpleasant surprises. If you don’t do enough research, you could find yourself in a new pension plan with even higher fees than you had previously.
When you’re in the process of moving your pension from several pots into one consolidated fund, your investment will be taken out of the market for some time while the transfer is complete. During that time, there is a risk you could lose out on significant growth. Of course, you could also find that once you’ve re-invested your savings into your new pension, it’s then worth less than it was before.
Always be aware of the risks and potential pitfalls when making a financial decision like this.
Watch out for any exit fees or charges when transferring your pension.
If you do want to transfer your workplace pension, it’s a fairly straightforward process once you break it down. Here are the steps you'll need to follow:
Collect all the information related to all your existing pensions, including:
Bring all this together and have it ready to pass on to your new pension provider. They should help you with the transfer once they have all the necessary data in place. And if you don’t know how to do this, or can’t find all your details, Penfold can provide free assistance to help you get everything in order.
Depending on who your existing providers are, you may have to pay “exit” fees before you’re able to transfer your pension. Some providers will also charge fees for allowing you to transfer your pension fund over to them. Thankfully, there are providers out there with no fees attached, like our free service here at Penfold.
Either way, do your research in advance to make sure you’re aware of all the upcoming charges. Similar to the point mentioned earlier, some fees will be so high that it may not actually be worth transferring your pension, depending on how much you have saved.
Once you’ve made a decision on where and how you’d like to transfer your pension, get in touch with the provider or follow their preferred online process to get the ball rolling. This will normally take a few weeks to be processed and for everything to be finalised.
For more detailed guidance on how to transfer your workplace pension, read our step-by-step guide here. And, of course, don’t hesitate to get in touch with us if you need any further assistance, and a member of our team will be happy to help.
When building towards your future, it makes sense to make things as easy for yourself as possible. It’s becoming more and more popular to transfer your workplace pension today, as it’s a proven way to:
And there are plenty of services available today which can make transferring your workplace pension even easier. Here at Penfold, we do all the hard work for you. We can transfer all your pensions no matter how many you have, what size they are, or what providers you’re with. Plus, you can enjoy the added bonuses of:
Even if you’re not great with your finances, we guarantee you’ll find Penfold simple, easy-to-use, and hassle-free. Get started with a pension transfer and take control of your financial future today.
If you’re interested in learning more about your pension, you can also take advantage of helpful guides, tools, and resources with modern pension platforms. Check out our extensive library of articles and guides offering advice to help you gain as much value as possible from your savings.
With pensions your capital is at risk. It's important to compare providers’ fees & any guaranteed benefits when deciding on whether to transfer, and be sure that the investments available are suitable for you. We cannot accept defined benefit pension transfers.
If you decide to close your Penfold account and the value of your pot has gone down, the amount returned to the provider may be less than what you originally transferred.
Please know that if your employer is paying into your pension currently, transferring that pot may mean you lose out on their contribution.