What Is A Frozen Pension

What Is A Frozen Pension And What Can You Do With It?

If you have recently had your company pension frozen, do you know what to do with it now? On leaving a company, many people just have their company pension frozen. This is common practice, and a new company pension is started with the next employer.

Once your pension is frozen, you are unable to make any further payments into it. The contributions that you and your employer made to your fund now make up the fund's total investment, and whilst it will continue to grow in line with the general fund, you cannot add to the capital. You should still receive an annual illustration of benefits and projections of income from your trustees or fund provider, so you will be able to plan ahead for your additional pension arrangements.

If you have a substantial investment in your frozen pension - at least £10,000 - it may be worth investigating a pension transfer. This will allow you to move your investment into a fund you can add to, or that has a higher level of benefits than your current scheme. If you're considering such a transfer, you need to get professional advice to make sure that you can transfer the total fund; in some cases, an employer may have placed restrictions on how long you needed to work for the company in order to retain the employer contributions.

If you have changed jobs regularly, you may have several frozen company pension schemes. Some companies now operate pension schemes that you can move with you, allowing you to maintain your contributions to your pension fund when you begin your new job. You can negotiate with your employer to see if they will pay contributions into your scheme, or you can increase your own contributions to maintain the fund level.

Whatever the situation with your frozen pension, you should keep all the information in a safe place so that when you reach the age at which you can collect your pension, you can easily get in touch with the trustees or the fund managers to request that the monies be released. File all the annual illustrations, and make sure that your spouse or other beneficiaries know where to find the paperwork in case you die before reaching retirement age. It may not be a pleasant subject, but it happens frequently, and it is an additional burden to those left behind if your paperwork is in a mess.

If you decide to investigate transferring your frozen company pension into another pension vehicle, then contact our Pension transfer advisors. Fully qualified, regulated by the FSA and independent, they can advise you on the best course of action to ensure a comfortable retirement.