It’s been a little while since we wrote about Pensions here – but they’re an always-relevant Tax issue! This time around, we’d like to talk about a perpetual frustration of changing jobs – continuity with pensions.
In the UK, everybody who earns over £10,000 a year must be auto-enrolled into a pension scheme. You pay a set amount of your pay into it each month, your employer matches at least part of it – everything is hunky-dory! Well, it would be if it weren’t for one thing – people change jobs. The modern working environment is not the “job-for-life” environment of 50 years ago. Nowadays, transferring from one job to another every few years is much more common. However, the fly in the ointment is that your pension doesn’t transfer with you!
It’s easy nowadays to end up with multiple different pensions from multiple different employers, all in your own name. Without diligently making sure that your details are kept up to date for each one, or transferring them to a central pension, you can end up losing track of funds forever – not exactly ideal. But how do you ensure continuity of pension without losing freedom of choice? It’s probably not simple, and it’s certainly not easy – allowing pensions to be directly attached to a person, no matter where they live or work, would probably require a system similar to National Insurance, adding another layer of bureaucracy to an already complex system.
Until then, though – we all have to be sure we’re keeping an eye out. Whether you’re running a business with pension enrolment for your employees, or moving from one job to another, you need to be sure that pensions are being managed effectively, and that everyone is on the ball!