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18 Feb 2015

New Pension Rules Allow Schemes To Move Jobs With You

Recent changes to pensions legislation mean that people who change jobs regularly will now be able to bring their pension pots with them, AOL Smart Money reports.

As of October 2016, when you change jobs your pension - as long as it´s no more than £10,000 - will be automatically transferred to your new place of employment. It´s likely that this will benefit the retirement prospects of workers who currently have little understanding of pensions or interest in saving for their future.

The government released details of the proposal in a draft document, which explained that the process would not happen overnight as not every scheme would be included to begin with, and individuals will be contacted to see if they would like their savings transferred. In time, however, the process will become an automatic one.

For occasions when a new employer is not offering as generous a pension package as the previous one, there are some exceptions to the new rule. For example, active members of a scheme will be left to their own devices, with only accounts that have been left alone for a minimum of 12 months eligible for automatic transferral.

What´s more, savers would not be automatically taken out of a final salary scheme and put into a defined contribution one, or one with significantly higher charges.

Auto-enrolment has meant that many more people now have pensions than previously, but a number of workers - particularly younger ones - are not yet prepared to engage with this type of saving. The government predicted that without the new changes, this would have led to 50 million dormant pots by 2050 - something pensions minister Steve Webb referred to as “billions of pounds floating around that should be funding better retirements for people.”

Copyright M2 Bespoke 2015

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