Pension Planning - Leaving Before Retirement

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Leaving Before Retirement

If you leave an occupational pension scheme after being a member for less than two years, you are not entitled to any pension rights the schemes offers, however this is completely up to the scheme itself. Some schemes refund your contributions, but those made by your employer are not refunded.

Should you leave a pension scheme after being a member for two years, but before you have reached retirement, legally you have rights to a pension.

You have a variety of choices about what to do with these rights, and for different circumstances different choices are best. If a large sum is involved, it would be worth seeking help from an actuary cannot be justified, you could obtain advice from an independent financial advisor (IFA) that specialises in pensions.

Although the decisions facing early leavers cannot be generalised, there are some points worth considering:

• If you belong to a public sector scheme there may be a `transfer club' that lets you transfer your pension, without any loss, to another scheme within the public sector.
• Many public-sector schemes offer exceptional benefits, even to early leavers. Be wary of transferring your pension rights to a private-sector scheme; as it is unlikely that the new scheme could match the benefits of your previous scheme.
• It may make sense to transfer your pension rights from one private-sector scheme to another as you switch jobs, as it can be easier to keep track of your pension entitlements. However you may lose out each time you transfer.
• Be cautious of transferring pension rights from an employer's scheme to a personal pension plan. The charges for a personal plan are often a lot higher than for an employer's scheme.
• When considering the relative merits of a possible transfer, make sure you look at the whole package of benefits under each option.