Your pension does not automatically move with you

Changing jobs is one of the most common reasons people end up with multiple pension pots. When you leave an employer, your pension pot with them does not disappear, but it also does not automatically follow you to your new role. Understanding your options at this point can help you avoid losing track of money, and avoid unnecessary charges or lost benefits.

What happens with your old employer's pension

You generally have three broad choices for a pension built up with a previous employer.

Leave it where it is

You can simply leave the pot invested with your old scheme. It will continue to be invested and, in most cases, will still be subject to ongoing charges, but you will no longer be contributing to it (and your old employer will not be either). This is often the simplest option and may be sensible if the scheme has low charges or valuable guarantees.

Transfer it to your new employer's scheme

Some workplace pension schemes will accept a transfer in from a previous employer's scheme. This can help consolidate your savings into a single active pot, which may be easier to track and manage, though you should compare charges and investment options between the two schemes first.

Transfer it into a personal pension or SIPP

Alternatively, you could transfer an old workplace pension into a personal pension or SIPP that you control directly, independent of any employer. This can offer more investment choice, though as with any transfer you should check for valuable guarantees, such as defined benefit promises or guaranteed annuity rates, before moving anything.

Your new employer's obligations

Under automatic enrolment rules, your new employer must normally enrol you into a qualifying workplace pension scheme if you meet the eligibility criteria (broadly, being aged between 22 and State Pension age and earning above a set threshold), and must make a minimum employer contribution alongside your own. This starts a fresh pot with the new employer unless you actively arrange a transfer in from a previous scheme. It is worth checking your new scheme's default fund and charges, and confirming you have not been auto-enrolled into a fund unsuitable for your circumstances without realising.

What to compare before transferring

Before consolidating an old pension into a new scheme, compare:

  • Annual charges, including the ongoing fund charge and any platform or administration fee
  • Investment choice and whether the default fund suits your risk appetite and time horizon
  • Any guarantees attached to the old pot, such as defined benefit promises, guaranteed annuity rates or enhanced tax-free cash
  • Whether an exit charge applies to leave the old scheme
  • The quality of online tools, customer service and retirement planning support offered by each provider

As with any consolidation decision, safeguarded benefits worth more than £30,000 legally require regulated financial advice before you can transfer.

Keeping track of multiple pots

Even if you decide not to consolidate every time you change jobs, it is worth keeping a simple personal record of every pension you hold: the provider, scheme reference, approximate value and any special features. Update your address and nomination of beneficiary details with each scheme whenever you move house or your circumstances change, since old providers can otherwise lose contact with you entirely. If you do lose track, the free Pension Tracing Service can help you find contact details using your former employer's name.

Key takeaways

  • When you leave a job, your options are usually to leave the pension where it is, transfer it into your new employer's scheme, or transfer it into a personal pension or SIPP.
  • Your new employer must normally auto-enrol you into a workplace pension and contribute alongside you, starting a fresh pot unless you transfer an old one in.
  • Compare charges, investment choice and any valuable guarantees before transferring any old pension.
  • Transfers of safeguarded benefits worth more than £30,000 require regulated financial advice by law.
  • Keep a simple record of every pension you hold and update your contact and nomination details whenever they change.