Pensions and leaving your job

If you're a member of a registered pension scheme that was set up by your employer, the pension belongs to you no matter why you leave your job. If you leave, but you're not retiring, there are options as to what you can do with your pension.

On this page:

Options when you leave your job 

If you're no longer working for the employer that set up your pension you may be able to:

  • leave it where it is and get it when you retire
  • carry on paying into it after you leave
  • transfer it to a new scheme
  • get a refund of your contributions
  • start taking your pension

Contact your pension scheme administrator before you make any decisions because your scheme may have different rules.


Leaving your pension where it is

If you leave work and don't get a new job, your pension will be frozen until you retire. This means that you’ll still qualify for the benefits you've built up - such as death benefit - together with any growth. If you belong to a:

  • Money purchase scheme - your pension pot will increase in line with any increase in the scheme investments
  • Defined benefit scheme - your frozen pension must increase by at least a minimum amount set out by law. This amount depends on when you built up your pension, when you stopped building up your pension and if the scheme is contracted out. Schemes can give bigger increases to your frozen pension if they want to.

If you leave work and stop contributing to the pension scheme you might not be entitled to some of the benefits of that scheme. For example the scheme may not pay a pension to a surviving dependant if you die before pension age.

Types of pension schemes

Keeping your benefits or pot in your scheme - The Pensions Advisory Service (Opens new window)


Carry on paying into your pension

If you carry on making payments to your pension you're still entitled to tax relief on your payments.


Getting a refund of pension contributions

You can usually only get your pension contributions refunded if you've been a member of a pension scheme for less than two years. This option isn't available for any pension savings you have in a personal pension, stakeholder pension or retirement annuity contract.

If you get a refund of your pension contributions, tax will be deducted at:

  • 20 per cent for refunds of up to £20,000
  • 50 per cent on any amount above £20,000

The scheme administrator will deduct tax before paying you the refund. The tax deducted reflects the tax relief previously given on your contributions. You can't reclaim the tax deducted but no further tax will be due on the lump sum payment.


If you leave your job and get state benefits

If you start to receive a state benefit such as Jobseeker's Allowance your pension won't be affected.


If you leave your job due to ill health

If you leave your job because of ill health you may be able to start getting your pension immediately.

Ill health and your pension


If you stop working and start taking your pension

If you leave work and start to take payments from your pension pot your pension scheme might offer you different options on taking your pension.

Taking your pension - the basics


More useful links

Leaving your pension scheme - The Pensions Advisory Service (Opens new window)

Choosing a financial adviser Money Advice Service website (Opens new window)

Pensions, state benefits and your tax code