Transferring frozen pensions
Learn what frozen pensions are and how to track or transfer a frozen pension to interactive investor
What is a frozen pension?
A frozen pension is a workplace pension which you no longer contribute to and are not withdrawing an income from.
A ‘frozen pension’ is not really frozen. A pension which you and your employer have stopped paying into will remain open and invested. It could still grow through interest and investment. The administrators of a frozen pension are likely to continue charging fees.
Frozen pensions are also known as deferred pensions.
How do I find frozen pension pots?
Employers are required to enrol employees into pension schemes. If you have had several jobs, there is a good chance you have at least one frozen pension.
To find a frozen pension you should contact your old pension provider directly. If you do not know who your provider was, you can contact the HR department of your old employer. They should be able to provide you with the details of the pension plan.
Another option is to use the government’s pension tracing service. This helps you to find the details of your former employers and pension providers.
Can I transfer a frozen pension?
You can transfer most frozen pensions. Many workplace pension schemes allow you to transfer in an old workplace pension. Alternatively, you can transfer a frozen pension into your SIPP or personal pension.
Many people choose to consolidate their pensions into one pension scheme. By doing this, you could save money on fees and reduce paperwork. However, you also have the option to continue to defer a pension until you can access it. This option could be beneficial if you are happy your scheme’s performance or if it has safeguarded benefits which would be lost in a transfer.
Some pensions are not transferable. For example, ‘unfunded’ public sector defined benefit pensions for professions such as teachers, NHS workers, civil servants and the emergency services. Check with your provider, or a pensions expert, if you are unsure whether you can transfer your pension.
Will I have to pay any charges if I transfer my frozen pension?
Depending on your provider, you may have to pay charges when you transfer a pension. Check with your current provider before you transfer.
At ii, we do not charge fees for transferring in or out.
Will a frozen pension grow over time?
Frozen defined contribution pensions remain invested over time, so your pension could grow in value. However, there is also the possibility it could go down in value.
If you have a frozen defined benefit pension, your annual retirement income may freeze when you leave the scheme. However, it could continue to rise with inflation. Each scheme has its own rules.
Why transfer a frozen pension to interactive investor?
If you want to combine your pensions for a simpler retirement, you could transfer your frozen pensions to the ii SIPP. With a SIPP, you can take control of your pension by managing how and where it is invested.
- We do not charge a transfer fee and it is free to leave
- Choose from over 40,000 UK and international investment options
- Access a range of flexible ways to take your retirement income
Frozen pension FAQs
Can I cash in a frozen pension?
From age 55, you can take all the benefits from any pension. However, this may not be a good idea.
Remember that your pension is meant to fund your retirement, so it may be better to withdraw your pension gradually, for example through drawdown or taking gradual lump sums (UFPLS).
As with any retirement decision, you should think carefully. We recommend talking to a suitably qualified financial advisor if you are unsure.
Can I take a frozen pension early?
Some schemes may allow you to take your pension early. Check with your pension provider if you think you might be able to do so.
What happens with my frozen pension when I die?
If you have a frozen defined contribution pension, you can pass it on when you die. Your beneficiary can inherit it tax-free if you die before you turn 75. If you die after age 75, your beneficiaries will pay income tax on the benefits.
If you have a defined benefit pension, it depends on the rules of the scheme. Normally, only your spouse, civil partner or dependents can benefit.
Find out more about pension inheritance rules.
What happens if I do not transfer my frozen pension?
If you do not transfer your frozen pension, you can start withdrawing an income when you reach retirement age (currently 55 – 57 from 2028). Until then, your money remains invested.
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