Sitting on pension benefits from previous employment, unsure of the details?

The nature of the modern workforce has changed dramatically over the last 20 years or so. It is rare now to encounter someone who has stayed working for the same employer for the duration of their working lifetime. The vast majority of people approaching retirement have had multiple employments and sometimes, periods of self- employment. Also, it is not unusual for someone to have spent a period abroad. 

Not only do people accumulate multiple employments but typically they also accumulate multiple pension pots. The mists of time can cloud all our memories and often, we encounter clients who genuinely can’t remember if they had a pension benefit related to a particular employment and on investigation, it often transpires that they have.  Details are in the bottom of that drawer that everyone has in their home! And often, the benefit can be more valuable than they think.

When someone leaves service from an employer that has a staff group pension scheme, they typically have the following options.

1.       Remain as a non-active/deferred member of the scheme  

2.       Transfer the value of the plan to a new employer’s scheme (If applicable)

3.       Transfer the value of the plan to a pension vehicle in their own name, typically a Personal Retirement Bond

There is no “one size fits all” advice here. This is especially true when you are leaving an employer that has a defined benefit pension arrangement. There can be compelling reasons for any course of action but every scheme is different, as are each client’s personal circumstances. Therefore, it is vital to get advice as there are technical and value nuances in the choices available to you that could mean that one option is more suitable than another. 

A lot of people simply never get around to looking at these benefits and by default are making a passive decision. It’s important in our view to make a proactive and informed decision, even if the decision is to do nothing. 

In conclusion, the important thing to remember is that while our focus can be on the pension arrangement we have with our current employer, pension benefits accrued from previous employments are a vital part of your overall pension planning.

So, our advice is, dig out details of those old pension plans from the bottom of that drawer and incorporate them into your next conversation with your adviser.         

Author: Cathal Flynn, QFA FLIA , Associate Director     

Direct Dial: 021-4521326 |  E: cflynn@olearylife.ie