Changing Jobs Pension: Leave It, Move It or Combine It (UK Guide)

14 min read

When changing jobs, pension money stays yours

When you change jobs, your workplace pension stays yours. Payments from you and your old employer stop on your last payday, but the money already in the pot stays invested, and you can draw it from the scheme’s pension age, which is 55 for most people today and rises to 57 in April 2028. Your new employer must then put you into a new workplace pension if you are aged 22 or over and earn more than £10,000 a year. From there you can leave the old pot alone, transfer it into the new scheme, or move it to a pension you choose yourself.

That is the government’s own position too. Its guide to workplace pensions when you change jobs puts it plainly: the pension still belongs to you, and if you stop paying in, the money remains invested until the scheme’s pension age. So when changing jobs, pension ownership is never the question. The question is what you do with it next, and that depends on which kind of pension you have.

After changing jobs, pension choices almost all turn on that split. A defined contribution pension is a pot you can move freely; a defined benefit pension is a promise you should rarely give up.

What a job change does to your pension, and what it leaves alone

Here is what changes on your last day. Your old employer’s contributions stop for good. If you were in a defined contribution scheme, the pot keeps its investments and keeps paying its charges. If you were in a defined benefit scheme, your benefit becomes “deferred”: it is fixed at your service so far and usually rises each year in line with inflation, up to a cap set in the scheme rules.

Two smaller things catch people out. If you were in a defined benefit scheme for less than two years, you may be offered a refund of your own contributions or a transfer instead of a deferred pension. And your new scheme may pay in a different rate, so the job with the bigger salary can come with a smaller pension. The money already saved stays put. One form does not follow you: your expression of wish, which tells a scheme who should get your pension if you die. Check it with the old scheme and fill in a fresh one for the new scheme. Changing jobs ends one stream of employer money and starts another; the gap between the two is what costs you.

Three ways to handle an old pension after changing jobs

After changing jobs, pensions can go one of three ways, and each one suits a different person. The table below says who each one is for.

To pick, answer four questions in this order. First, is it defined benefit? If yes, the default is to leave it alone, and the pitfalls section below explains why. Second, what does each scheme charge each year, as a percentage of the pot? Third, does the old pension carry anything you would lose by moving, such as a guaranteed annuity rate, a right to take more than 25% tax free, or a right to retire before the normal minimum age? Fourth, how many pensions will you have in ten years if you leave this one behind?

When moving the old pot into your new scheme makes sense

Move it to the new job’s scheme when three things are true: the old one is defined contribution, it carries no guarantee or special right, and the new scheme charges less. The best home for an old pot is the cheapest scheme that does not make you give anything up. If you expect to move again within a couple of years, a pension you choose and control may be the better permanent home, because it follows you instead of staying with each employer.

Your new employer must enrol you in a workplace pension

Yes, you start a fresh pension. Under automatic enrolment, your new employer must enrol you if you are between 22 and State Pension age and earn over £10,000 a year. The legal minimum is 8% of qualifying earnings, of which at least 3% comes from the employer, worked out on pay between £6,240 and £50,270 a year. Many employers pay more, and some will match extra contributions you make, so ask HR for the exact rate. Employers can also delay enrolling you for up to three months, which is one of the hidden costs of a move.

How to move your pension when changing jobs, step by step

If you are changing jobs, pension transfers go smoothest in this order. The key point: you start the transfer at the new pension, and the new provider pulls the money across, so you never handle the cash. Anyone who asks you to take the money out first is not running a normal transfer.

1. Wait until your new pension exists. You need a member or policy number from the new scheme, which usually arrives a few weeks after your first payday.
2. Gather the old pension’s details. Find the provider name, your policy number, the current value, the yearly charge, any exit fee, and any guarantees. Your latest annual statement has most of this.
3. Ask for a transfer value. For a defined contribution pot this is close to the current value. For a defined benefit pension, ask for a statement of entitlement, which gives a cash equivalent transfer value guaranteed for three months.
4. Check the receiving scheme accepts it. Some workplace schemes take no transfers in, and many will not accept a defined benefit transfer.
5. Fill in the transfer form at the receiving end. Most providers have an online form. You give the old provider’s name and your policy number, and they request the money.
6. Answer the safety checks. Since November 2021, schemes must check transfers for warning signs of scams. If one is flagged, you may need a free guidance appointment with MoneyHelper before it can go ahead.
7. Confirm it arrived. Check the amount, check which fund it was invested in (some providers park it in cash at first), and keep the closing letter from the old provider.

Timing depends on the pension type. Defined contribution transfers between providers on the industry’s electronic system often finish in two to six weeks. Paper transfers and defined benefit transfers can take three to six months. If your transfer stalls past six weeks, call the new provider first, since the new provider does the chasing.

What you need before you start a transfer

• Your National Insurance number
• The old provider’s name and your policy or member number
• A recent statement showing the value and the yearly charge
• Written confirmation of any exit fee or guarantee you would lose
• Your new scheme’s name, your member number, and its yearly charge
• For defined benefit pensions: the statement of entitlement and, above £30,000, proof of regulated advice

Pension pitfalls between jobs: final salary transfers, fees and tax

When changing jobs, pension moves can go wrong in three places.

Defined benefit transfers. This is the highest-stakes version of the decision. If your guaranteed benefits are worth more than £30,000, the law requires you to take advice from a regulated adviser before you transfer them into a pot, and the scheme must check you did; the Pensions Regulator sets out the rule in its guidance on defined benefit to defined contribution transfers. The Financial Conduct Authority’s page on pension transfers lists what you give up: a guaranteed income for life for you and your dependants, protection against inflation, and the Pension Protection Fund safety net if your old employer goes bust. You also cannot undo it. For most people, a defined benefit pension from an old job is worth more left exactly where it is.

Public sector pensions. The NHS, teachers’ and civil service schemes are unfunded: they are paid from government money, not from a pot of investments. The law does not let you move them into a defined contribution pension at all, so if you leave for a private employer, they stay where they are. If you move from one public sector job to another, the Public Sector Transfer Club can carry your years of service into the new scheme, so they count there instead of being frozen in the old one. Ask the new scheme within 12 months of joining, because the window is usually time-limited.

Fees. Lower charges are the most common reason for moving an old pension. Here is what that looks like in money. The figures below are our own illustration, not a forecast: a £20,000 pot, no further payments, 5% yearly growth before charges, left for 25 years.

A gap of 1.25 percentage points in yearly charges costs over £16,500 on that one pot. Ask both providers for the total yearly charge, including fund fees, before you decide.

When moving a pension can cost you tax

Moving money between two registered UK pension schemes is not taxed. When changing jobs, pension tax risks come from four other places. First, a transfer to anything other than a registered scheme counts as an unauthorised payment, and the tax charge on it can reach 55%. Second, some older pensions carry a protected right to take more than 25% tax free or to retire early, and a transfer can wipe those out. Third, the annual allowance, £60,000 for most people, covers everything paid into all your pensions in a tax year, so two employers in one year share one limit. Fourth, ask whether your new scheme uses “net pay” or “relief at source”; if you earn below the personal allowance, relief at source is the one that still adds 20% tax relief.

When to combine pension pots from old jobs

After years of changing jobs, pension pots pile up. Consolidating them means moving several old pensions into one, and for many people it is the single most useful thing they do with old pensions. Generic lists of pros and cons do not help much, because the right answer depends on three things: how big each pot is, what kind of pension it is, and how often you change jobs.

A quick rule for when combining pots helps

Combining works best for small defined contribution pots with ordinary terms. You get one set of charges, one login, one statement, and one place to check when you plan your retirement. It also makes losing a pension far less likely, and that risk is bigger than it sounds. Combining hurts when an old pot carries an exit fee, a guarantee, or a protected right that the new one cannot match. Combine the defined contribution pots you can see clearly, and keep any guarantee you cannot buy back.

Why changing jobs often costs more pension than you think

A single job change barely dents a pension. A career of them can. Each move tends to leave two marks: a pause in contributions, and one more small pot behind you.

Take the pause first. Your new employer can wait as long as three months to enrol you, and with a break between roles on top, a move can easily skip a quarter of contributions. On a £35,000 salary at the 8% minimum, that is roughly £575 that never goes in. Left to grow at 5% a year for 30 years, it would have been about £2,500. Repeat that across five or six moves and the gap reaches five figures, before you count any employer match you gave up.

Then the lost pots. The Pensions Policy Institute estimates there are 3.3 million lost pension pots in the UK, holding £31.1 billion, about £9,470 each on average. Most belong to people who moved house after changing jobs. Pension providers lose track of them, and so do their owners, which is why a forgotten pot is the first mistake to guard against. Every job you leave quickly adds a pension gap and a small pot you are likely to forget.

Forgot a pot while changing jobs? Pension tracing is free

To track down a lost pension from an old job, begin with the government’s free Pension Tracing Service. Give it the name of the old employer or pension provider, and it returns contact details for the scheme. It cannot tell you whether you have a pension or what it is worth, so contact the scheme next with your National Insurance number and dates of employment. Old payslips, P60s and welcome emails often name the provider. Pensions dashboards, which will show all your pensions in one place online, are being phased in over the next few years.

The cheapest protection for your pension is to make fewer moves you later regret. A job you leave after 18 months costs you another contribution gap, another small pot, and another probation. Most people judge an offer on salary, title and commute, then find out about the parts that decide whether they stay only after they start: the pace, the kind of work they spend their days on, and how much room they get to work their way. Our guides on career move advice and on whether changing jobs for more money is worth it go deeper on judging an offer.

We make a tool for the part that is hardest to judge from a job advert. Pigment’s Career Self-Discovery Assessment asks how you prefer to work, then gives you a report on your strengths, the kind of workplace that brings out your best, and the types of roles worth a look. It costs $79, once. If you can see what suits you before you sign, the next pension you start is more likely to be one you keep paying into for years.

A first-week checklist for your new pension

If you are changing jobs, pension admin in your first week takes under an hour, and it covers the gaps most people only notice years later.

1. Ask HR when you will be enrolled and whether they postpone enrolment.
2. Ask the employer contribution rate and whether they match extra payments.
3. Ask whether they offer salary sacrifice, which can save you National Insurance.
4. Write down your old pension’s provider, policy number and yearly charge.
5. Update your address and email with the old provider so it can reach you.
6. Update your expression of wish, the form naming who gets your pension if you die, with both the old and the new scheme.
7. Check whether the old pension is defined benefit or carries any guarantee.
8. Compare the two yearly charges once your new scheme sends your details.
9. Set a date three months out to decide: leave it, move it, or combine it.

For everything else that changes with a new role, from notice periods to your final payslip, see our full checklist for changing jobs. For US readers the rules differ, and our guide on what to do with a 401k when changing jobs covers them. Ten minutes with HR in week one prevents the lost pot you would spend hours tracing in ten years.

Common pension questions