Changing jobs can be an exciting but sometimes stressful time. You get to learn new systems and meet new people but there are things that need to be sorted during this transition. One major item that is often overlooked is the pension you may have had with your previous employer. Most people either forget about that pension or think it is fine leaving it where it is but there are risks involved with doing that.
Are there risks leaving my pension at my previous employer?
The main risk is that the employer goes out of business while this is a remote possibility this can happen. The recent collapse Carillion is an example of this. It was totally unexpected and now all those people who had Carillion pensions both past and current are contacting the UK’s National Employment Savings Trust to see if they will receive their pension benefits. Can you imagine the panic and anxiety that ensues after such an event, I think it is safe to say none of us wish to experience this. The whole situation could have been avoided had the employees withdrawn their pension and taken control of it themselves. A second risk is that you are limited to the investment funds within the employer’s pension plan. By taking control of your pension you are then free to select from a wide variety of investments. You can invest in funds, stocks and shares and properties. Getting the right advice is vital to ensure you invest in the product that is right for you. Your appetite for risk must be assessed before any investment is made.
What are my options?
Removing you pension from your previous employer is not a taxable event as you are just transferring it from the employer’s pension scheme to a personal pension scheme and therefore you are not liable for tax of any kind. In order to give balance to my article I must also tell you the downside of taking the pension from your previous employer’s scheme. It is that some pension schemes have benefits that you would not receive in a personal pension plan. Once again getting the right advice is vital to ensure you make an educated decision. I have helped countless clients navigate this process and would love to help you Call me today to set up an appointment and see what option is best for you… and as always there is no obligation with this appointment.