Should you transfer an old pension to a new employer?

A pension transfer to a new employer's scheme is often possible, but only if both schemes allow it and you would not lose benefits by moving.

Can you transfer an old workplace pension into your new employer's scheme?

Sometimes. Both ends of the move have to agree. GOV.UK tells you to check that "your existing pension scheme allows you to transfer some or all of your pension pot" and that "the scheme that you wish to transfer into will accept the transfer". Some schemes set a first-year deadline, so timing matters. This page's short form takes your phone number, and an FCA-authorised adviser later rings about the old pot you hold; the call costs nothing.

Changing job is one of the reasons GOV.UK gives for wanting to move a pension. The rules for each scheme differ, though. MoneyHelper says you can usually transfer "at any point, unless the scheme rules list restrictions", and that some schemes "might also only accept transfers in during the first year of you joining – or not accept transfers in at all". So it is worth asking the new scheme early what it will accept, and by when.

The money also has to go to the right kind of place. The destination has to be a registered UK scheme. GOV.UK says a pot sent anywhere else, or cashed as an unauthorised lump sum, is an unauthorised payment and you pay tax on it. Tax on a legitimate move between registered schemes is covered in tax on a pension transfer, and the mechanics for any provider in how to transfer a pension.

Is it worth moving an old workplace pension, or should you leave it?

Leaving it where it is stays a perfectly good choice. MoneyHelper points out that you can choose which pensions to bring together and which to keep apart; nothing obliges you to move them all.

The case for moving is mostly convenience and cost. According to MoneyHelper, a move can leave you with a single provider, including once your income starts, and with a defined contribution pension the new scheme might also have lower fees, different investment choices or more ways to take money out. How the two schemes' charges compare is a matter for pension charges and the documents each scheme sends.

The case against is what you might lose, and MoneyHelper warns that a transfer usually cannot be undone. Its examples of features only the old provider may offer:

• funds that pay a terminal bonus after a certain date, such as a with-profits fund (see transferring a with-profits pension);
• a guaranteed annuity rate, which may give you a guaranteed income higher than you could buy elsewhere;
• a protected normal minimum pension age below 55, which can mean a longer wait for access if you move;
• exit fees or other penalties for leaving.

The wider question of whether to combine pots at all, feature by feature, is in should I merge my pensions.

Does it matter whether your old pension is defined benefit or defined contribution?

It matters a great deal. Most schemes set up recently are defined contribution, where the pot depends on what was paid in and how it was invested, MoneyHelper says, unless you work in the public sector. A defined benefit pension (final salary or career average) promises an amount based on your pay and years of service instead.

For a defined contribution pot, moving it into a new employer's defined contribution scheme is the ordinary case, and the points above are the ones to weigh. For a defined benefit pension it is different. The FCA says: "The FCA and The Pensions Regulator (TPR) believe it's in most people's best interests to keep their DB pension." A move into a defined contribution scheme, the FCA adds, gives up the DB scheme's guaranteed lifelong income (for you and for your dependants) and its protection against inflation. The details are in final salary pensions.

Three further rules apply to a defined benefit pension:

• Where the transfer value of safeguarded benefits, such as a defined benefit pension, is more than £30,000, the old scheme has to confirm you took appropriate independent advice before the money goes into a defined contribution scheme; values of £30,000 or less are exempt (SI 2015/742, regulation 5). MoneyHelper says this advice "can often cost thousands of pounds", and that if your employer has offered a financial incentive to transfer, the employer must pay for it. A specialist is covered in finding a pension transfer specialist.
• A scheme may refuse transfers out in certain cases, for instance within a year of normal retirement date or once the pension has started paying out.
• Most public sector schemes refuse a move into a defined contribution arrangement, MoneyHelper says.

If your new employer runs a defined benefit scheme of its own, whether it takes transfers in, and what it would credit you for the old pension, is for that scheme to say. Whoever rings after your request through the enquiry form here can explain how that works for you, at no charge.

What checks will your old scheme make before paying out?

Trustees and scheme managers have to make specific checks before they act on a transfer request. The Pensions Regulator's guidance says they must tell you within one month of your request that it will be assessed, unless the transfer has been made by then. The checks depend on where the money is going.

• If the receiving scheme is a public service scheme, an authorised master trust or an authorised collective defined contribution scheme, the guidance lets the transfer go ahead with no further checks.
• If it is another occupational scheme, the old scheme must ask you for evidence of an employment link: a letter from the employer confirming continuous employment, the schedule of contributions, three months' payslips and bank statements showing the salary paid in. Under the regulations, the link needs (among other things) at least 3 months' continuous employment with the new employer, ending on the date the old scheme receives your request, and evidence that does not show the link counts as an amber flag (SI 2021/1237, regulations 11(1) and 9(4)).
• Some warning signs, which the guidance calls red and amber flags, stop a transfer or mean you must first show you have had MoneyHelper guidance. Examples include unsolicited contact about the transfer, an incentive to make it, or someone carrying out a regulated activity, such as giving advice, without the right FCA permission.

Which category your new employer's scheme falls into is not something you need to work out; the old provider will tell you what it needs. Replying promptly helps, because the guidance says a failure to answer a second request for information within a month can be treated as a red flag. More on delays and flags is in pension transfer rules and red flags.

Anyone who rings, emails or texts out of the blue to move your old pension should be treated with suspicion; MoneyHelper tells you not to move money or invest because of a cold call, a visit, an email or a text, calling any such approach likely to be a scam. A request that you start yourself with a scheme you have chosen is a different thing. The FCA's pension scams page sets out how to recognise one. Before you ask for a transfer, you can get a second opinion on the new scheme. Request a call-back here and a call will come from an FCA-authorised adviser, for nothing.

How do you ask for the transfer, and how long does it take?

MoneyHelper lists the usual order: check your current scheme allows transfers out; make sure you will not lose benefits; check the new scheme allows transfers in; work out whether you need to pay for advice; ask the current provider for a transfer value and the information needed; then ask the new scheme to start the transfer. The two schemes then arrange the payment between them.

On timing, MoneyHelper says: "A transfer often takes between two and six weeks, but your provider has up to six months to action your request." The Pensions Regulator's guidance expects most requests to be straightforward and finished "well before the statutory six-month deadline". For defined benefit pensions, the transfer value (a CETV) is usually valid for three months, and the provider has up to three months to send it, according to MoneyHelper. That is a reason to line up advice before you ask for it. If it is slow, see how long a pension transfer takes.

Do pension contributions move with you when you change jobs, or under TUPE?

A transfer moves the money already built up in your existing pension to a different scheme or provider. That is separate from joining your new employer's scheme and being paid into it, which is covered in workplace pension rules.

TUPE is a different situation: the business you work for changes owner, rather than you choosing to move a pot. GOV.UK's guide to business transfers covers pensions in one line: "Employees’ company pension rights earned up to the time of a transfer are protected, but the new employer does not have to continue an identical pension." If you later move the old pension into the new owner's scheme, the Pensions Regulator's guidance tells the old scheme that a transfer to a new employer's scheme after a TUPE transfer or a takeover is not necessarily a cause for concern.

Other things people ask when changing jobs

What if my new employer's scheme will not take transfers in?

MoneyHelper says some schemes might not accept transfers in at all. You could leave the old pension where it is, or look at a registered scheme that does accept them; moving into a SIPP and choosing where to transfer cover the options.

How can I tell whether my old pension is defined benefit or defined contribution?

MoneyHelper suggests using its tool to find your pension types or asking your pension providers. If you cannot trace the old pension at all, finding a lost pension is the place to start.

Could moving my old pension affect protections I already have?

It can. Among the things GOV.UK says a move may take away are an earlier pension age you were entitled to, fixed or enhanced protection, and tax-free cash above a quarter of the pot; each provider can say whether any of these applies to you. Protected pension age on transfer goes into the age point.

My old employer has offered me an incentive to move a final salary pension. What should I weigh?

MoneyHelper warns that the effect of Income Tax and National Insurance on a cash payment or boosted transfer value "might not make up for the guaranteed income you'll lose". The advice requirement above still applies, and the employer must pay for it when it is the one offering the incentive.

What will it cost to move my old pension?

It depends on both schemes. Among the possibilities GOV.UK mentions are a fee for the transfer itself and payments into the new scheme. Pension transfer fees sets out what the law caps and what to ask for in writing.

Old pot, new scheme, retirement plans: a lot to weigh. To talk it over, request a call-back here; the FCA-authorised adviser who rings does so without charge.