Transferring Pensions to New Jobs and Abroad

Transferring Pensions to New Jobs and Abroad

Taking a pension to a new workplace or different country?

By Marcia Smith

How to move a pension to a new job

Your pension scheme will have procedures in place that enable you to obtain a statement on the value of your pension. If you change jobs you can ask your present scheme to pay a cash value on your behalf, which must then be invested in either a pension scheme with another employer, a personal or stakeholder pension or a buyout contract (sometimes referred to as a section 32 contract).

You may choose to leave what you already have in your present scheme and start another scheme with your new employer. When considering a transfer it’s important to seek independent financial advice as you could incur reduced fund values, loss of benefits and exit penalties.

The government has announced plans to make it easier for people to consolidate pensions when they switch jobs. The Department of Work and Pensions (DWP) states that its scheme will allow those with pensions worth less than £10,000 to carry their pension forward to their next job if they want to. This is in a bid to reduce the number of low value pension pots that get left behind and forgotten about by workers who move company. Currently transfers are voluntary and the onus is on the holder to initiate the transfer.

How to take your pension abroad

It may be possible to transfer your UK pension to a pension arrangement overseas if the plan is a Qualified, Recognized, Overseas, Pension Scheme (QROPS). To qualify as a QROPS, the scheme must meet certain requirements set out by UK tax law and must satisfy a range of criteria. More information on these can be found on the QROPS website and at the Pension Advisory Service website.