What Happens to Your Pension When You Change Jobs?
It’s worth reflecting on how the job market has changed over the past few decades. Thirty or forty years ago, many people stayed with one employer for life, often with access to a defined benefit pension scheme that provided a guaranteed income in retirement.
Today, that’s rarely the case.
Jobs that existed a generation ago may no longer exist, and the pace of technological change continues to reshape the employment landscape. One article from MoneyDigest in the US suggested that Gen Z could hold up to 18 jobs across six different careers in their lifetime. While that might sound extreme, the direction of travel in the UK is not dissimilar.
According to Aegon’s Second 50 Report (2023), over half of UK workers anticipate working into their 70s, and many expect to have several jobs. Assuming six different employers over a 40–50-year working life could mean six or more pension pots.
The money in each pension pot remains invested – it doesn’t vanish – but pensions left unattended can easily be forgotten. You may lose track of who the provider is, forget your nominations, or miss out on better investment options. It also becomes harder to make long-term plans when your savings are scattered.
In this blog, we explore what happens to your pension when you change jobs and how to stay in control of your retirement savings.
What Happens to Your Existing Workplace Pension?
When you leave a job, your workplace pension remains yours. Contributions from you and your employer up to your leaving date will continue to be invested in that scheme. The value of the pot may rise or fall, depending on market performance and how the money is invested.
However, the pension becomes a deferred scheme – you're no longer actively contributing, but charges may still apply. There are a few key things to consider:
Ongoing charges: Even if you’re no longer paying in, annual management charges can still apply and gradually erode your pot.
Lack of visibility: You might stop receiving updates or forget to check how the investments perform.
Outdated investment choices: Your original selections may no longer match your risk profile or goals.
Old nominations: Have you reviewed your nominated beneficiaries? These can go out of date as life changes.
According to the Association of British Insurers (ABI), there could be over 1.6 million unclaimed pension pots worth nearly £20 billion in the UK, often because people forget about small deferred pensions.
Starting a New Pension with Your New Employer
Under the UK’s auto-enrolment rules, most employers must enrol eligible employees into a workplace pension scheme. You'll be enrolled automatically if you’re aged 22 or over, earn more than £10,000 a year, and ordinarily work in the UK.
You and your employer will contribute, and you’ll receive tax relief on your contributions, making it a very efficient way to save.
Key points to remember:
Auto-enrolment minimum contributions total 8% of qualifying earnings (5% from the employee, 3% from the employer).
You can increase your contributions to build a bigger pension pot.
Some employers offer more generous schemes, including salary sacrifice options, which can improve tax efficiency.
Starting a new job means starting a new pension – unless you choose to transfer your existing pot(s) into it. That’s where consolidation might come in.
Should You Combine Your Pensions? Pros and Cons
You will likely have several pension pots if you’ve worked for multiple employers. Combining them into one scheme can make life easier, but it’s not always the right move.
Benefits of Combining Pensions
Simplified management – One provider, one login, one statement.
Lower fees – Older schemes may charge higher fees than modern platforms.
Unified investment strategy – Easier to align your pension with your goals and risk appetite.
Avoiding lost pots – Keeping track of your savings avoids missing out later.
Risks to Consider
Loss of valuable benefits – Defined benefit schemes may offer guaranteed income or favourable terms that are lost on transfer.
Exit fees – Some older plans still apply charges for transferring out.
Investment choices – Your new scheme might not have the same fund options or performance track record.
Before consolidating, it’s essential to review each pension in detail. At Ifamax, we provide tailored advice to help you understand your options and make informed decisions.
Pension Transfer Process: What to Expect
If you decide to transfer one or more pensions into a new scheme, here’s a brief overview of what to expect:
Request a transfer value – Your provider will issue a statement showing the current value, charges, and guarantees.
Compare options – You or your adviser assess potential new schemes' features, charges, and investment options.
Apply to transfer – Complete the necessary forms and provide your consent.
Scheme communication – Your new provider contacts your old one to initiate the transfer.
Funds are transferred – Your pension is moved and invested in the new scheme according to your selected strategy.
Some transfers are straightforward and completed within a few weeks; others, particularly involving older or defined benefit schemes, may take longer and require specialist advice.
Final Thoughts: Keep Track, Stay in Control
Your pension is one of the most valuable assets you'll ever own. It deserves more than to be left behind every time you change jobs.
Ifamax can help you take control of your pensions, from reviewing old schemes to designing a long-term retirement strategy that suits your lifestyle.
If you’re unsure where all your pensions are, the government’s Pension Tracing Service can help: www.gov.uk/find-pension-contact-details
And if you’d like to speak to a financial planner about your pensions or long-term goals, book a free consultation with us today.
Risk warning
This article is distributed for educational purposes only and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product. Reference to specific products is made only to help make educational points and does not constitute any form or recommendation or advice. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.