Where Is Your Pension From Previous Employment?

29 July 2022

More than six in 10 (63%) Irish workers surveyed were considering changing jobs in 2022, according to data released by LinkedIn at the start of the year.We are seeing an increase in clients moving to a new employer and it is a period of big changes and new routines so the decision making on what to do with the pension from your old employer is always left on the long finger.

It is important to be aware of the value of your pension and what level of risk you are taking with your pension. There is no point in only taking an interest in your pension when you get to your late fifties or early sixties and wishing then that you had taken some time to review your policies earlier.

If you have a pension from a previous employment, you can request the pension provider to issue you with a statement of your options. I would urge you to speak with an impartial financial adviser when you have these options issued to you.This will allow you to discuss your own personal situation so that you are making the best decision for you. When it comes to financial advice, we do not recommend a “one size fits all” approach.

Typically, you will have the following options available to you:

  1. Refund of contributions - if you had less than 2 years’ service, you may be entitled to a refund of your contributions. This option may not be open to every pension scheme and it is worth noting that if you do choose this, your old employer will also receive a refund of the contributions they paid into your pension. The refund you get will be subject to income tax at a rate of 20%.  
  2. Move to a pension policy in your own name - typically, this is the most favourable option, as it gives you control of the pension but it will also give you more flexibility in the future. For example, you could access this pension from age 50 but continue to work. The old employer’s pension can be moved into a Personal Retirement Bond (PRB) or Personal Retirement Savings Account (PRSA) in your own name. In doing so you are essentially cutting the cord with your old employer and at the same time, keeping it independent from your new employer, which can increase your options for accessing the funds in retirement.
  3. Move your pension to your new employer’s pension - if your new Employer has a pension scheme and the scheme rules allow, then you can transfer your old pension to your new employers. In this case you should consider the fact that the scheme rules of the new employer’s pension fund will now apply to the transfer value.
  4. Do nothing (Default Option) - this is usually what happens as no action is required for this. Moving jobs can be a busy time and it may not be possible to take the time to review your options with an advisor. But it is important that you take some time in the future to discuss the pension. With this option, the pension remains in the old company’s pension scheme. You should receive a statement each year and no further contributions can be made to the fund. You should ensure you inform the pension provider of any changes to your contact details, so they have up to date information for you.

If you have a pension from an old employment, that you have been meaning to look at for months or years, I recommend that you get in touch with a financial adviser to discuss your options to ensure the pension is in the best product for your individual needs.

Jacinta Clerkin BSc QFA FLIA RPA is a Qualified Financial Advisor, Fellow of the Life Insurance Association and Retirement Planning Advisor. You can contact her through John F. Loughrey Financial Services by telephone on 074-9124002 or by email on jacinta@jfl.ie.

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