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What Happens To My Pension When I Start A New Job?

When you start a new job, your employer is legally required to auto enrol you in their auto enrolment pension scheme. You need to be at least 22 years old (up to State Pension age) and earning over £10,000 a year. As long as you meet the auto-enrolment conditions you will be automatically enrolled in the workplace pension, even if you're on maternity leave, adoption or carer's leave or you're on a short-term contract.

If you are aged between 16 and 21 and earn at least £6,240 a year (in the 2022/23 tax year), you can ask to be a member of your workplace pension scheme and your employer must contribute to your pension pot. If you earn less than £6,240 a year then you can still ask to join the pension scheme but your employer doesn't have to make pension contributions to your pension pot. The legal minimum contribution is 4% from the employee, 3% from the employer and 1% tax relief. The minimum contribution requirements are based on qualifying earnings but some employers apply it to the whole of your earnings. It's worth talking to your employer to check this if you're unsure. Qualifying earnings is the band of pre-tax employment income between £6,240 and £50,270 in the 2022/23 tax year.

Your employer may offer more generous terms. It's always worth asking whether, if you were to contribute more into your workplace pension, your employer would also contribute more. Some employers may match your contributions so it's worth talking to your employer about this. Workplace pensions are important for building up your savings for retirement and the more you and your employer can contribute, the more you will build up your pension pot. Only increase your contributions into your pension if you can afford to do so without it affecting your standard of living. You can always increase this incrementally.

When you leave your job, your employer will stop contributing into your workplace pension and your contributions will also stop unless you decide to make personal contributions into that pension. You may be able to move your previous pension pot to your new pension provider. For some transfers you may be required to obtain independent financial advice. It's important to keep track of your pensions from the different places you've worked. If you have a lost pension then you can use the Government's Pension Tracing Service to find the contact details of the pension provider.

Please note this is guidance only and not financial advice. Please seek independent financial advice before making any investment decisions. The information in this post is based on current taxation and legislation, which may change in future years.


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