Break all ties with a previous employer

The Pensions Office can provide the advice you need to decide if you should leave your pension benefits with a past employer or take the transfer value to a personal pension. Making the wrong decision could result in a much lower pension fund at retirement, lower death benefits or both. 

Break all ties

Many people who approach The Pensions Office for advice on the value of benefits built up in a previous employer’s pension scheme express a desire to “break all ties” with that employer (and, therefore, transfer these pension benefits to a personal pension). 
However, in the majority of cases a transfer is not likely to be beneficial to the scheme member. This is partly because of legislation, partly because of the way in which transfer values are calculated and partly because of the performance of key investment markets over recent years.

Worries about the ex-employer's financial security

It is important to note that a company’s pension fund must be kept totally separate from the company’s own finances. This means that, even if the companies finances fall upon hard times, there should be little or no risk to the pension benefits promised to employees and former employees.

 
So, The Pensions Office advises all these people to 'stay put'?

That’s usually the starting point for our assessment and advice. But it is by no means always our overall recommendation. Moving a transfer value to a personal pension can offer significant advantages in certain circumstances, including:

• Immediate tax free lump sum, or immediate income, or both.
• Personal investment control, especially in a Self Invested Personal Pension (SIPP).
• Flexibility of retirement income from year to year.
• Higher death benefits and freedom to nominate desired beneficiaries.
• A more complicated assessment is required where the pension scheme offers former employees a 'bonus lump sum' for transferring.