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Many people have registered in pension schemes in previous job roles, but have forgotten to combine the funds when changing jobs (or were unaware that they needed to).

These inactive pensions are commonly referred to as “frozen pensions” but they are more accurately referred to as dormant pensions or preserved pensions. Let’s look at what a frozen pension is and what you can do with it.

Before taking a more in-depth look at what a frozen pension is and what you can do with it, the Pension Transfer Specialist explain the Frozen Defined Benefit Pension plan in this short video from our YouTube channel.

What Is a Frozen Pension?

A frozen pension is a previous workplace pension that you are no longer contributing to. If you’ve changed jobs several times and haven’t considered combining your pensions, you’re likely to have a few frozen pensions. Some of these inactive pensions may be subject to hefty fees, so it’s worth looking into them.

According to research in 2017, up to one fifth of British adults have lost track of multiple frozen pensions. With people changing jobs more frequently nowadays, it’s more important than ever to keep track of your pension savings. You’ll not only have peace of mind knowing you’ve saved enough for a comfortable retirement, but you’ll also be able to see how your savings are performing and what fees you’re being charged.

There are several things you can do with a little research and careful planning to get your frozen pensions back on track.

The first step is to locate all your previous workplace pensions. If you don’t have the contact information for your old pension providers, there are several ways to find them.

If you contact your former employer, the human resources department should be able to provide you with information about the company’s pension plans. It will then be your responsibility to contact the provider directly to determine the value of your pension.

If you have several frozen pensions, using the government’s free Pension Tracing Service to locate them may save you time. This is a searchable database where you can enter the name of your former employer or pension provider to find the information you need. This service is available both online and by phone.

What Happens With a Frozen Defined Benefit Pension?

A Final Salary (also known as Defined Benefit) pension scheme is another type of pension scheme that is sometimes referred to as a frozen pension. Again, this is not a frozen pension because the benefits you have accrued in your pension scheme will increase each year from the date you left that employer until you reach the age of retirement. Some of these increases will be in line with inflation, while others may be higher, but it is clear that the pension will not be frozen.

Whatever your situation, it is critical to keep all information regarding these so-called frozen pension benefits in a safe place so that when you reach the pensionable age, you can easily contact the trustees or fund managers to request the funds to be released. Remember to keep all of your annual illustrations, and make sure your spouse or other beneficiaries know where to look for them if you die before reaching retirement age. This is not a pleasant scenario, but it must be considered because your paperwork is a burden to those left behind.

Remember, there is no such thing as a frozen pension because whether your pension fund is invested and thus subject to investment fluctuations, or you are a deferred member with pension benefits increasing through other means, you do not have a frozen pension because it is always subject to change.

What Can You Do With a Frozen Pension?

There are several things you can do with a frozen pension once you’ve found it.

  • Transfer your pension: If you have multiple frozen pensions, you can combine them all and transfer them into your current pension.
  • Set up a new pension: Personal pensions are separate from workplace pensions and can be set up by anyone. With a personal pension, you can select your pension provider and the scheme that best meets your needs.
  • Invest in an annuity: Investing in an annuity will help you secure a guaranteed income for a set period of time, whether it’s a few years or the rest of your life. You can purchase an annuity from the age of 55.
  • Drawdown: The main alternative to purchasing an annuity is a drawdown, which allows you to keep your pension invested until you need it. To begin using a drawdown, you must be 55 or older.

Can I Move a ‘Frozen Pension’?

You should be able to move frozen pensions into a more suitable policy depending on the type of pension you have. If you move, there may be restrictions and exit fees imposed on your pension, so it’s always a good idea to get a full breakdown of the terms of the pension policy.

If you worked in the public sector and received a Defined Benefit pension as part of your salary, these are usually unfunded schemes, and you may be unable to transfer these pensions.

Does a ‘Frozen Pension’ Still Grow?

The short answer is most likely ‘yes’ – your frozen pension should continue to grow. However, because neither you nor your former employer will be contributing to the pension, the rate of growth may be reduced. Provider fees, market conditions, and poor investments may all have an impact on pension performance, reducing the retirement funds you could be enjoying. In extreme cases, the charges could completely deplete the pension fund.

Reasons for Freezing a Defined Benefit Pension

Many reasons are given by companies for freezing or terminating a Defined Benefit plan:

  • To reduce costs while increasing competitiveness.
  • To reduce funding obligation volatility caused by fluctuating equities markets, pension asset values, and interest rates.
  • Pension financial performance can impact loan covenants and company profit and loss volatility.
  • Pension assets are taking up a larger share of corporate balance sheets.
  • The pension sponsor is acquired by another company, and the two companies’ pensions cannot be easily merged.
  • It is preferable to terminate the pension, but the pension sponsor cannot afford to purchase annuities from a private-sector insurer to cover benefits as required in a standard termination (see Difference Between Terminating and Freezing a Defined Benefit Plan).

Because future benefit accruals are halted, freezing a Defined Benefit pension plan usually results in some immediate cost savings. The freeze, however, does not address unfunded liabilities or eliminate cost volatility. Instead, the frozen plan is still subject to the same interest rate, investment, and demographic risks as active Defined Benefit pension plans. Furthermore, the frozen pension is subject to the same minimum funding, compliance, administrative, and fiduciary requirements as an ongoing Defined Benefit pension plan.

With all of these considerations above, you should always seek financial advice from an FCA-regulated IFAs who can help you to give you the financial advice that is suited to your situation, goals, and needs. Hit the button below for your first free initial consultation with one of our IFAs and let us help you with your Frozen Defined Benefit Pension plan.


Dominic James Murray

My career in financial services began in 2010 during my Bachelor of Science (BSc) Undergraduate degree at Aston University in England. The degree required me to spend a year abroad working with an established organisation.

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