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Changing jobs or careers can be exciting, but in the shuffle, many people forget one crucial thing: what happens to the pension they built up with their old employer. Your pension isn’t just locked away forever; depending on how long you’ve contributed, you usually get a few clear options. It pays to understand them.
Your Pension Options: It Depends on How Long You Contributed
Your choices depend mostly on how long you’ve been part of your employer’s pension scheme.
If you’ve had less than two years
- Some schemes allow you to get back the amount you personally contributed (but usually not what your employer contributed). This typically comes as a lump sum, but note that tax may apply.
- You can either leave your pension in your old employer’s scheme as a “deferred” pension, or you may be able to transfer it to another pension, such as your new employer’s scheme or a personal retirement bond.
If you’ve had more than two years of pensionable service
- You generally cannot take a full refund of what you contributed; your pension stays with the scheme.
- But you do get to choose how to handle it going forward. You normally have three main options:
- Leave your pension in your former employer’s scheme.
- Transfer your pension to a Personal Retirement Bond (PRB).
- Transfer your pension to your new employer’s Occupational Pension Scheme.
What You Can Do With Your Pension
Here are the main paths you can take when you leave your job.
Leave it where it is (deferred pension)
You can simply leave your pension pot in your former employer’s scheme. You become a “deferred member”. Your pension remains intact; you just stop contributing.
- When you retire, you may then take your pension benefits, typically 25% as a tax-free lump sum and the rest as retirement income via an annuity or an Approved Retirement Fund (ARF).
- This is the easiest route but possibly the least flexible. Since you’re no longer contributing, your pot may grow more slowly, and you might have less control over how it’s invested.
Transfer to your new employer’s pension scheme
If your next job offers a company pension scheme, you might be able to move your old pension into it. This consolidates your pension savings in one place, which can make things easier to manage.
- This is often a practical choice if the new scheme has good fund options, low fees, or if you expect to stay there long-term.
- However, not all pension schemes allow transfers, and transferring may mean giving up certain benefits or flexibility linked to your original scheme.
Transfer to a personal pension: Personal Retirement Bond (PRB) / Buy-out Bond
You can also choose to move your pension into a pension in your own name, often called a Personal Retirement Bond (PRB).
- This gives you much more control; you decide how your funds are invested, and you stay in charge regardless of what employer you have.
- Many people with multiple employments favour this; it helps consolidate all old pensions into one, avoiding the pain of tracking down multiple small pots.
- If you delay more than two years after leaving your job before selecting this route, you might need permission from the pension scheme trustees.
Make Sure Your Pension is Working for You.
Refund of Contributions: When That’s Even an Option
Getting a refund of the pension contributions you made isn’t always possible; it depends on how long you were in the pension scheme. With most Irish employer schemes, having more than two years’ service means you won’t get a refund.
If you do qualify (e.g. you had under two years), it’s usually your own contributions that can be refunded; employer contributions are typically not repayable. This refund is often taxable (subject to tax at the standard rate).
This may seem tempting, but bear in mind: withdrawing early could mean giving up potential long-term investment growth and sacrificing retirement security.
How to Choose What’s Right for You
There’s no one-size-fits-all answer. Which option is best depends on factors such as how long you were in the scheme, your new job (or plan to be self-employed), how actively you want to manage your pension, and your retirement goals.
As a general rule:
- If you like simplicity and are okay with a “set it and forget it” approach, leaving your pension as a deferred pot might suffice.
- If you value consolidated savings and are comfortable with the new scheme’s structure, transferring to your new employer’s scheme could make sense.
- If you prefer control, flexibility, and independence, especially if you expect multiple job changes, consider a Personal Retirement Bond (PRB).
Because pension rules and tax can be complex, it’s often worth speaking to a financial advisor so you can put a personalised retirement plan in place that suits your own unique situation.
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Read Our Articles
We’ve put together plenty of articles to guide you through key financial decisions. You might like the following:
- Why a Private Pension in Ireland Is Smarter Than You Think
- Setting Up a Private Pension in Ireland
- 6 Reasons to Review Your Pension This Year
- 7 Smart Ways to Use Tax Relief to Grow Your Pension in Ireland
- What to Do 5 Years Before Retirement
- The Essential Guide to Pension and Retirement Planning
- Private Pension Myths in Ireland
- Do You Know What Happens to Your Private Pension Plan When You Die?
- How a PRSA Can Help You Achieve Financial Freedom in Retirement
Get a Pension and Retirement Planning Quote
Leaving a job doesn’t mean losing your pension. Instead, it’s a chance to assess your retirement planning and take control of your savings. Whether you leave your pension where it is, transfer it, or move it to a personal plan, being informed now can make a big difference to your future financial security.
We can help you explore your options and find the best plan for your needs and goals. Get a Pension Quote Today!
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All our content has been written or overseen by a qualified financial advisor. However, you should always seek individual financial advice for your unique circumstances.
