Pension refund from previous employer

[Roundthemoon]

Hi I just recently left a job for a new one.

I was in the job for a year. I paid into a pension while I was there..

My mother said to me that I could get a pension refund from the job.

I hadn't thought about that before.

Can I do that?

Yes, if you leave within two years of joining if it’s a defined benefits scheme. Google ‘refund pension contributions’ and then contact HR at the company you left.

I don't understand. Why would you get a pension refund? You paid into the pension, I am assuming your employer paid into the pension, so now you have a pension with the amount accrued over the last year. What's the issue?

Not if you were in the scheme more than 30 days. You used to get a refund of your own contributions if you left a pension scheme after less than 2 years' membership, but the legislation was changed a few years ago to prevent that and ensure people keep their pensions invested if they change employers frequently. You should look into transferring your pension from the old employer's scheme to your current one, though.

Just to clarify, my comment assumed the scheme isn't defined benefit (aka final salary). But if it's a DB scheme you'd be mad to take a refund even if available, as even a year's accrued benefits will be worth more than the refunded value of your own conttibutions

Most schemes aren't defined benefits though - it's much more likely to be DC. Just let it sit there for now. It's costing you nothing, and earning you money. At some point you can decide whether to consolidate it with another pension, when you've got bigger/other pension pots.

I discovered this week that my first ever pension (2 years' contributions, totaling £13k) is now worth £32K, and I have done absolutely nothing to/with it in that time. It's just sitting there, earning interest.

If it was a workplace pension you can contact the scheme and ask for a refund.

No you can't.

Yeah I need to read more about pensions.

I had previously thought that I had to let my pensions from all previous employers just build up.

But my mum (she has a lot more job experience) told me that i can ask a previous employer for a refund of pension contributions if I want to.

I hadn't realised that before.

I with some employers, you can. As I just did a quick Google online on the topic, and there are people saying that they asked for a pension refund from their previous employer

Why would you want a refund though? Are you desperate for the money?

Unless the scheme is DB (which it probably isn't unless your previous job is public sector), your mum is wrong- see my post above and that of PP.

Thank you!

You can but you'll only get a refund of your contributions, not the employers. So you're much much better off transferring it to wherever you've gone to now.

It depends on the type of scheme, but you usually can't get a refund. The rules changed a few years ago

I'm not desperate for money. I just like to know my options! Especially if it was a job that i was in for a short enough time.

I've been in previous jobs for 4+ years.

I was only in this one for one year.

Yes I thought that too. You can transfer the money to your new employers scheme, and that means your previous employer's contributions are transferred too.

Was the scheme DB or DC?

"If you worked at your job for less than 2 years before you left
If you were in a defined benefit pension schemee_ for less than 2 years, you might be able to either:
• get a refund on what you contributed
• transfer the value of its benefits to another scheme (a ‘cash sum transfer’)
This depends on the type of defined benefit scheme and its rules. Check with your employer or the pension scheme provider."

Ultimately, claiming back contributions is a very poor financial decision unless you're absolutely desperate for money. 1 year’s pension contributions from yourself plus your employer might be worth, say £500 to you now, but if you're only in your 20s and will retire when you're 65, that’s 45 years’ interest that you’re giving away. It could be worth 10x the current value by then.
Remember, any contributions you’ve paid were done so before tax, so if you claim them back you’ll have the tax you saved on the payments deducted from whatever you get back.