When things change
Leaving your pension scheme
If you leave your employer or stop paying contributions to your pension scheme, you don’t lose your pension benefits.
We know that circumstances can change; this could mean that you need to or, choose to, stop paying contributions into your pension scheme. You don’t have to remain a member of your pension scheme and can stop paying contributions at any time. However, if you do stop, you will be treated as having left the scheme and your employer will also stop paying contributions.
- Taking a refund
- Keeping your benefits pot in your scheme
- Transferring your pension
- Re-joining your scheme
Leaving your pension scheme or stopping contributions
This means that you will stop building up pension benefits, although any benefits that you’ve built up already remain yours. You may also lose any other benefits that the scheme provides, such as life cover. Your pension provider or scheme administrator can tell you more.
If you leave your employer, you will also leave their workplace pension scheme, although if you have a personal pension, stakeholder pension or self-invested personal pension scheme, you can normally continue contributing to this (although you will not receive any further contributions from your ex-employer).
Once you have left the scheme, you have several options:
- You can leave your accrued pension benefits in the scheme until you decide to start drawing retirement benefits;
- You can transfer your accrued benefits to a new employer’s workplace pension scheme or a personal pension scheme;
- If you’re a member of a personal pension, self-invested personal pension or stakeholder pension scheme, you can continue contributing to it, but you won’t receive any further contributions from your (old) employer. If you join a new employer, they may decide to contribute to your scheme;
- If you have been a member of a workplace pension scheme for less than two years, you may be able to ask for a refund of your contributions. The amount refunded is taxable. If you were a member of a Group Personal Pension (GPP) or Stakeholder Pension Plan, you can't receive a refund of contributions regardless of how long you were a member;
- If you were automatically enrolled into your employer’s workplace pension scheme and decide to stop paying contributions, but you continue working for the same employer, they will automatically re-enrol you into the scheme every three years, if you’re eligible. You can opt out or stop contributing again, if you do not want to re-join; and
- If you’re still working for the same employer, you may be able to rejoin the scheme.
If you leave benefits in the scheme, you usually have the option to transfer your benefits later. If you’re a member of a public sector defined benefit pension scheme, it may not be possible to transfer your benefits to a defined contribution pension scheme after 5 April 2015. The Government is currently considering whether to apply this restriction to all defined benefit pension schemes.
Special rules may apply if your employer closes their workplace pension scheme if they are taken over or merge with another company. These rules are called the Transfer of Undertakings (Protection of Employment) regulations, or TUPE.
Where can I find out more?
If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.