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  • Quit your job to start your own business? Don’t leave your old workplace pension behind

    If you're starting your own business and leaving your old job, here are our top tips for understanding any old workplace pensions, and your transfer options.

    World events in recent years have seen people’s working lives transformed. Some people might have done some re-evaluating, and even given up their nine-to-five to become self-employed.

    Becoming your own boss has lots of perks, but it also means your financial future rests on your shoulders. On top of managing all your business costs, you need to build up a retirement pot big enough to be able to fall back on in later life.

    Worryingly, recent research suggests that only 20% of self employed are paying into a pension. Working for yourself means you don’t have the advantage of an employer’s workplace pension. Nor the employer contributions you’d receive or an HR department to set one up for you. Saving for retirement and managing your pension is solely your responsibility.

    Here’s some top tips to help you understand workplace pensions, how to find them and your options for transferring.

    This isn’t personal advice, information correct on 16 May 2023. You’ll usually need to be at least 55 (rising to 57 from 2028) before you can access the money in your pension. Pension and tax rules can change, and any benefits depend on your circumstances. If you’re not sure what the best course of action is for your circumstances, please seek financial advice.

    What is a workplace pension?

    To encourage people to save for the future, the government introduced auto enrolment. This means that employers must enrol eligible staff into a workplace pension scheme and pay into it on their behalf. The employee also has to pay in a portion of their salary to benefit.

    What happens to my pension when I quit my job?

    When you change jobs your workplace pension still belongs to you, but payments into the scheme will stop. From this point on you’ll need to communicate directly with your pension provider.

    It’s really important to continue to review your pension regularly and to keep your provider up to date with any changes to your name or address in particular. If your provider has out of date details, you may miss important information about your pension value, investment performance and retirement options.

    Without regular contact and pension statements, you may accidently abandon your pension and lose out on valuable savings you’ve made.

    More on lost pensions and how to find them

    Benefits of combining workplace pensions into one account

    Paying into a pension might not be on the forefront of your mind - especially if you don’t have any spare cash. But that shouldn’t stop you from organising your old workplace pensions - you could give your investments more chance to grow without having to make a payment.

    Having multiple pension pots dotted around with different providers can make it harder to keep track of how much you’ve got, what you could be on track to receive and where you’re invested. Having everything in one place can give you more clarity and better control.

    Some older pension schemes also offer limited investments. Transferring them to a more modern pension that offers greater investment choice means more opportunities, and possibly even better returns. Remember, investments rise and fall in value, so you could get back less than you invest.

    By only needing to deal with one provider, it can even help you to free up some spare time - after all, running your own business often means that your time is money.

    If you’re considering transferring, you need to be aware that pensions are usually transferred as cash, which means you’ll miss any market rises or falls for a period. If you choose to transfer your investments as they are, you won’t be able to trade during the process.

    You should also check that you won’t lose any valuable benefits or need to pay high exit fees before you apply to transfer.


    Where can I transfer my old workplace pensions?

    Lots of people who work for themselves use a private personal pension. There are two main options.

    SIPP (Self-Invested Personal Pension)

    SIPPs generally offer low and flexible minimum contributions, usually meaning you can stop and start payments based on how well your business is doing. They typically offer a wide range of investment options - which could bring the potential for better returns.

    Stakeholder pension

    Similar to a SIPP, with a stakeholder pension you’re able to make small payments which are flexible. The main difference is they normally offer less investment choice and have a cap on charges.

    Why choose the HL SIPP?

    • Free to set up – our yearly charge for holding investments is also only 0.45%. See our full list of charges, including dealing fees.
    • Wide range of investments – select your own investments, pick from ready-made portfolios, or pay for personal advice on where to invest.
    • Excellent customer service – our dedicated helpdesk are on hand to answer your questions no matter how big or small.

    More on the HL SIPP

    New to SIPPs?

    If you’d like to find out more about how SIPPs work, or whether a SIPP is the right pension for you, download our essential guide. You’ll learn more about how they compare to a stakeholder pension, and how to get started.


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