Home > Pensions > Pensions And Changing Employment

Pensions And Changing Employment

By: J.A.J Aaronson - Updated: 28 Jan 2013 | comments*Discuss
 
Employment Pension Occupational Pension

Traditionally individuals would join a company and many would remain in the same organisation for the entirety of their working life. If they had the option and inclination to do so, they would contribute to an occupational pension scheme, which would then fund their retirement. Today, however, job turnover is considerably higher, and as a result employees are potentially faced with difficult decisions regarding their pensions when they change employment.

Personal and Occupational Schemes

In the first instance, it should be noted that there is a distinction in these cases between personal and occupational pension schemes. By definition, a Personal Pension Scheme is tied to the pension holder as opposed to the employer. This means that, regardless of any changes in employment, your personal pension will remain constant as long as you continue to make regular contributions. As a result, a personal pension plan can offer significant advantages over a series of occupational pensions if you happen to change employment frequently.

Even if you have an Occupational Pension Fund, however, this will still be transferable when you change employment. Often occupational schemes have been contracted out to private pension providers. If this is the case, you will need to contact the company that runs your occupational pension in order to receive a statement telling you how much your fund has accrued. In these instances, you may have a number of options.

To begin with, it is important to note that it will be highly beneficial for you to contribute to an occupational pension scheme if it is on offer (see our article Why Join A Pension Scheme?). As a result of the likelihood of your employer also contributing to your fund, there are few circumstances in which a private pension represents a better deal. Therefore, you are likely to wish to cease making contributions to any personal pension and swap to an occupational scheme. If you choose to do this, you should remember that you may incur charges from your personal pension provider.

Similarly, you may wish to close your personal fund altogether and transfer a cash equivalent to your new occupational pension scheme. However, some occupational pension providers are not willing to take such payments. You should always contact your new provider and your existing provider before taking any such decisions, as your personal pension provider will also charge for this service.

What Are FSAVCs?

Another potential option is to keep your personal pension open but have it transferred into a Free-Standing Additional Voluntary Contribution scheme, or FSAVC. This means that you can keep your existing fund open and use it as an extra 'pot' into which you can place additional voluntary contributions. Some private pension providers will offer to make this conversion for free, and so it is certainly an option that is worth looking into.

If you choose to change from a personal to an occupational pension, you will need to inform the Department for Work and Pensions in order to ensure that you are paying the correct National Insurance Contributions. If you had been contributing to a personal pension, you will no longer receive contributions from the DWP, but will instead pay NICs at a lower rate. You should contact your Tax Office in order to make sure that you receive the correct form.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Latest Comments
  • Jas
    Re: How Will My Second Job Be Taxed?
    Hi I have 2 jobs my first job I get paid 1150 second job paid 362 after tax it is BR tax but I'm sure on both my jobs I am…
    2 July 2020
  • Stig
    Re: What is My Tax Code?
    I recently got moved on to a k2600 tax code. My earnings have increased and I now get a fully fuelled car. My earnings prior to this were…
    19 June 2020
  • Legend
    Re: Should I be Paid Mileage Allowance?
    Hi my company are not paying me mileage I'm doing 84 miles a day.They provide me with a works van but can I still claim…
    3 June 2020
  • Caramel
    Re: How Will My Second Job Be Taxed?
    I currently have a full time job and wonder if I get a second job, is it worth it? If earning under 40k (doing both jobs and…
    30 May 2020
  • Dee
    Re: How Will My Second Job Be Taxed?
    I'm currently working full-time, as from next week I will be going part-time, and at the same time starting a new part-time…
    6 May 2020
  • Kel
    Re: How Will My Second Job Be Taxed?
    Hi I have been offered two jobs and want to work out if I accept what would I be taxed or what will I take home after tax and…
    20 April 2020
  • Ness
    Re: Should I be Paid Mileage Allowance?
    I have submitted my mileage allowance form to HMRC and have had notification that I am owed £**** for miles over 10,000.…
    17 April 2020
  • Amanda
    Re: What is My Tax Code?
    Hi I am getting a second job and I just worked it out with both wages I will still be under my personal allowance at 12500 so will I be taxed…
    4 February 2020
  • Pat
    Re: Payment of Pensions
    Who do I contact to change pension payments to weekly from monthly and is it easy to do regards Pat
    29 January 2020
  • Leelee
    Re: How Will My Second Job Be Taxed?
    I worked 48 hours a wk but hey paid for 44 hours a wk iv been offered a second job but only on bank would I have to pay tax…
    29 November 2019