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Retirement:
What happens if I leave my job?

With the exception of getting your contributions back if you leave an occupational scheme you have been in for less than two years (provided the scheme is either a final salary scheme or a stakeholder scheme) your contributions, and the benefits they have built up will be held in the pension scheme until you reach retirement.

If you are in a final salary scheme they are referred to as deferred benefits. Your pension is calculated (as per the scheme rules) at the date you left the scheme but is then generally increased annually until you reach your retirement age. It is unusual to transfer your pension benefits out of a final salary scheme.

If you stop making contributions into a money purchase scheme, the funds you have already built up will continue to grow until you take your pension benefits at retirement. Care should be taken if the fund is only small as, without regular contributions, the charges made by the insurance company could exceed the growth of the fund and effectively erode your ultimate pension. This is unlikely to happen with a stakeholder pension due to their charging structure.

When you stop contributing to a money purchase pension scheme you generally have two choices:

You can leave your pension benefits in that scheme until you retire

You can transfer your pension benefits into another pension scheme.

If you leave your pension benefits in a scheme but are no longer making contributions to the scheme, the scheme charges may gradually erode your pension fund (particularly if it does not have strong growth and the charges are substantial) and your final pension may be reduced as a result. However the pension scheme may impose a penalty if you want to transfer your fund to another pension scheme.

The maximum pension benefits from employer�s pension schemes relate to what can be accrued over your whole career. If you have pension benefits from previous employments when you retire they may have to be taken into account when working out the tax limits that apply to the pension from your final employment. It is however rare for this to reduce the pension from your final employment.