Leave the preserved pension with your ex-employer

Pension - Preserved or Frozen Pensions

Once an employee has left their employer they cease to be an active member of the company pension scheme.

Typically, if you have been in a company scheme for more than two years you will be left with a "preserved" or "frozen" pension that will be looked after by the company pensions department until retirement age.

Pension Increases

Although the term "Frozen" is commonly used it is somewhat misleading as the pension will normally increase or revalue, as its correctly known, between the date you left and your retirement (this is known as the deferred or preserved period). Once an employee has left their employer they cease to be an active member of the company pension scheme.

Money Purchase Pensions
Money purchase pensions will continue to grow in line with the underlying investments.

Final Salary Pensions
If you left a final salary company pension scheme after 31/12/1990 the law dictates that the pension scheme must increase it during this preserved period by the Retail Price Index (R.P.I.) capped at 5%.

Some schemes, usually only the Public Sector (NHS, County Council), will be more generous than they are required to be by law and allow the members pension to increase in deferment at the same rate as the R.P.I. without imposing an upper limit of 5%. This is clearly very generous especially in times of high inflation.

Contracted out Schemes

Many company pension schemes are "Contracted-Out of SERPS, S2P". Essentially, this means that the pension scheme has decided to take responsibility for part of your State Second Pension, S2P previously SERPS.

Money Purchase Pensions
Money built up from contracting out through Money Purchase Pension Schemes will continue to grow in line with the underlying investments.

Final Salary Pensions
Benefits built up by contracted out final salary schemes are inflation linked in different ways depending on whether you have benefits built up prior to 6th April 1997 or after 6th April 1997. The fund built up from contracting out of SERPS prior to 6th April 1997 is known as the Guaranteed Minimum Pension, GMP and can be revalued in different ways depending on your employer.