[Written by Carla Seely]
Gone are the days when you worked for the same employer for 50 years, for most of us, we have worked at different companies and even in different industries during our working lives.
Throughout the course of your working career you probably have accumulated some pension money and if you have not rolled over your pension money from one company’s pension plan to the next, then chances are, you have several pension plans with multiple pension providers.
Since the Pension Act came into effect in 2000 and being part of the National Pension Scheme [NPS], one of the most common questions we get asked in the pension business is, how to deal with your defined contribution pension plan when you leave a company?
Your pension options once you leave a company will depend on your previous company’s pension rules. For most pension members you will have 90 days from the date you cease working to move the pension money out of the company’s pension plan.
Perhaps you have started a new job and will be eligible to join their company pension plan in 90 days from your hire date. If this is the case, then you can speak with your HR department to confirm the pension plan rules and make sure they allow for a pension plan rollover.
If they do allow for it, then you can rollover your previous pension money into the new company’s pension plan. All you need to do is find out who the pension administrator is on the new company’s plan and they will provide you with the necessary paperwork to complete in order to ensure the pension is rolled over. Nothing changes on those old contributions; locked-in contributions will still be locked-in and voluntary contributions will still be voluntary.
One benefit from rolling over your pension is that this allows you to keep your pensions under one roof and have one investment strategy for your pension money as opposed to having different pension accounts at different providers, and paying multiple sets of fees. Look at it as consolidating your pension money, therefore, keeping your pension organized and simplified.
If you are between jobs, you will need to roll your pension money over into an individual pension plan while you are on the search. Again, nothing changes on those old contributions; locked-in contributions will still be locked-in and voluntary contributions will still be voluntary.
Each pension provider on island has individual pension plans. At Freisenbruch-Meyer we call our individual pension plan a Personal Retirement Plan [PRP]. It is important to shop around to make sure you understand your individual pension plan options and what fees are associated to the individual plans.
Once you have made your decision, your pension plan provider will fill out the paperwork to roll over the funds into your new individual pension plan account.
Another important area to note is that you can roll your individual pension plan into a group plan [company plan] or vice versa and you can roll from one group plan to another group plan. However, what you cannot do is start drawing down on those funds until you have retired. [Unless you are applying for a withdrawal under financial hardship].
Make sure you know where your pension[s] are, consolidate if you can and design an investment strategy that will give you a clear direction so you can be on the right path towards retirement.
- Carla Seely is the Vice President of Pension and Investments at Freisenbruch-Meyer, if you would like any further details please contact email@example.com or call 441 297 8686
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