Any personal pension scheme is an individual contract, between you and the insurance company and that is no different for a group personal pension. Your employer isn’t part of that contract, so the policy is still yours after you leave. However, your employer may contribute on your behalf and/or may collect contributions from you through payroll and pass them on.
There are quite a few factors to consider when we review your group personal pension. Price is a major factor – what are the charges attaching to your existing plan? How do the costs vary as the policy becomes more valuable?
Older group personal pension contracts may include a benefit known as ‘waiver of contribution’ benefit. This is an insurance benefit; it credits your pension contributions for you if you are unable to work for more than six months. It sometimes pays out if you are unable to do your own job. If your job had a lot of manual tasks, or was considered to have higher risk of long-term sickness when you took out the pension, the insurance may not pay out unless you are unable to do any job.
We would consider this to be quite a valuable benefit because very few pension providers these days still offer waiver of contribution benefit.
You also need to consider investment options – does the pension have a good range of investment options for you to choose from, and do you know what to do with the choices? Some older plans offer very limited choices, but bear in mind that one fund can be enough if its risk profile is right for you and if its performance is good enough and if its charges are competitive so that high costs do not eat into your pension.
Another factor that needs careful consideration is contract penalties. ‘Contract penalties’ means the terms & conditions – the policy costs that can apply as a percentage of your overall pension policy fees, as a percentage of each contribution, monthly fees, costs for life assurance or ‘waiver of contribution’ benefit and fees for swapping from one investment choice to another. In some cases, there are fees for all of those. In general terms, newer pension contracts are probably less expensive, except Self-Invested Personal Pensions. See the separate section about Self-Invested Personal Pensions.
We’re qualified and experienced to look at each pension in turn, to tell you what you need to know about it. We can project what that pension could be worth when you retire and tell you what to do about it. Do you want to know whether you should leave it where it is? or combine it with other pensions you have left behind? or add it to your new employer’s pension? If you would like our help, get in touch.