Transferring a company pension from an ex-employer to a new arrangement has never been the easiest of tasks. Normally the pension provider, on behalf of the company, issues a ‘leaver pack’ written in pensions technical ‘jargon’ that more often than not is filed away until retirement. It is no wonder workers have built up a string of pensions earned throughout a working life.

This problem of small pension pots could escalate further with the introduction of auto-enrolment later this year. Millions more employees will be enrolled in to workplace pension schemes than currently, with an even greater number of abandoned pensions when an employee moves on.

This complicated system of transfers is at last the subject of interest for politicians and the pension industry. Steve Webb, pensions minister, wants to remove barriers and make it as easy as possible for people to grow big fat pension pots. The main barrier is that employees do not have access to guidance at the point they really need this. Advisers are reluctant to put themselves forward for work that is poorly rewarded, and most employees do not value the cost of advice when the stakes seem low, and the pot in question is pretty insignificant.

It is not in the interests of the ex-employer to step in and offer guidance, and much of the information provided to the leaver lacks detail or fails to mention specific key features of the pension or the impact on transfer. The employee should not be expected to understand the technicalities of their specific pensions or whether transferring is in their best interests.

Neither should the ex-employee assume that moving to a new pension, whether the one on offer from a new employer or to an alternative personal pension, should be considered good value. Hence there should be no assumption that removing barriers is the solution to growing big fat pension pots.

The new scheme could be more expensive to run then the current scheme. I have yet to see a leaver’s pack that provides details of the ongoing charges to enable a comparison to be made. Some leaver information omits to mention that higher tax-free cash is available on the current plan that could be lost on transfer. Most will not comment on any potential enhancement to the benefits that would be given up. These are some examples of omissions in the paperwork provided on leaving employment.

Employees about to leave an employer deserve better and should have access to all key information, including ongoing charges, penalties, guaranteed benefits, tax-free cash and specifics on the underlying investments. This information should be provided before the employee leaves whilst they continue to have access to the employer HR team rather than several weeks after the employee leaves.

If you are about to leave your current employer or are entitled to a pension from a previous employment, you should take time to review the pension in detail to ensure you obtain best value.

• Consider taking advice even if this means paying a fee for the work. This could pay off over time.
• Ensure you request information on the charges you are paying currently, versus what you could be paying if you were to move plans.
• Are there penalties on transfer, or any loss of guarantees, such as at retirement? This could be affected by when you need to retire and some guarantees are often date specific, so beware.
• Would you lose out on a higher level of tax-free cash if you move? Most pensions allow 25% of the pot to be taken as cash, but some older plans pay significantly more on which no tax is paid.
• Is there a pension specialist within your company that can provide you with information and help before you move on?
• You also need to consider where the pension is invested and how this could be affected by moving, including current market conditions as well as specific investment funds. Is this a good time to transfer, or better to remain invested until markets improve?

All of the above considerations could make a big difference to your standard of living in retirement and you deserve to reap the benefits.