What to do with the money in your pension pot is not one of the things that leaps to mind when changing jobs – but it should.
Next to a home, a pension is probably the biggest asset most people will ever own.
It is easy to overlook pension benefits in the excitement of changing jobs – and for expats the thrill of moving abroad.
But you need to look after your financial interests, so here are a few pointers about dealing with your pension when changing jobs:
It’s likely you have moved for money if you have switched jobs.
If your new company offers a pension, then find out the details. If they don’t check what you already have and think about opening your own personal pension to keep saving.
If you are an expat, find out what your residence status is so you can start a UK SIPP and harness all the tax breaks or look at transferring to a QROPS overseas pension for expats.
If you can increase your level of saving, do so – if not at least maintain what you were setting aside in your last job.
Next, keep an eye on your investment mix. What was doing well or in vogue a couple of year’s back may not be doing so well now. Your pension pot depends on how your investments are performing, so it makes sense to watch the markets – but don’t be too obsessive with day-to-day tinkering.
Consolidation is the next thing to think about. Your final pot may improve if you keep all your funds in one place that has a wide investment choice and low fees.
You can consolidate to a SIPP or QROPS with some restrictions – for instance you cannot transfer a state-funded public sector or civil service pension.
Take advice before switching providers or consolidating as a company pension may have some valuable guaranteed benefits that you cannot buy if you move your money.
These include spouse pensions, guaranteed annuities and index-linked benefits.
On the other hand, moving your cash to somewhere you can access the fund from the age of 55 may be attractive to some savers.