Column by Carla Seely: Rollovers of pension plans

[Written by Carla Seely]

It is rare for an employee to work for the same employer for fifty years. For most of us, we have worked for different organizations in a variety of different capacities over our working lives, and during our tenure in these various organizations, most of us have accumulated pension funds along the way. However, many of us often forget to move [i.e., rollover] our pension funds from our old to our new organization when we change employers.

A very common question we get asked in the pensions department is, “What should I do with my defined contribution pension plan when I leave my company?” »

Once you leave your employer, the options available for your retirement will depend on the pension rules of your former employer and, of course, the legislation. A typical scenario for most retirement participants is a fulfillment window of ninety days from the date you stop working to transfer the retirement money from the pension plan to the company to another retirement vehicle.

Now, you may have started a new job and are eligible to join your new employer’s pension plan ninety days after your hire date. If this is the case, you can speak to your human resources department to confirm that the rules of your new employer’s pension plan will allow you to renew your pension funds. All you need to do is find out who your new employer’s pension administrator is and complete the necessary paperwork to execute the rollover. All sources in your plan remain the same – immobilized will remain immobilized and voluntary will remain voluntary.

One of the main advantages of pension rollovers is that they allow you to keep all of your pension funds with one provider. This means that you have a dedicated investment strategy for all of your accrued pension funds instead of having different pension accounts with different providers, perhaps with different investment strategies and while paying several sets of pension administration flows. Plus, consolidating your pension funds can be a much more streamlined approach to easing your path to retirement.

On the other hand, if you are between jobs, you will have to make decisions regarding your pension funds; transferring your pension money to an individual pension plan will be the best solution when you are looking for a job. Again, nothing changes with the sources – the locked will stay locked and the willing will stay willing.

Since each pension fund on the island has individual pension plans [e.g., at Freisenbruch-Meyer, we call our individual pension plan a Personal Retirement Plan, or PRP], it’s important to shop around to make sure you understand your individual pension plan options and the fees associated with each plan. Once you’ve made your decision, your retirement plan provider will guide you through the paperwork to transfer your retirement funds to your new individual retirement plan.

You should also be aware that you can transfer your individual pension plan to your new employer’s plan – if the rules of your new employer’s pension plan allow it – so when you join your new organization it is worth check with the human resources department options are available.

Ultimately, your retirement plan can be a significant part of your retirement income. It is essential that you manage it well by not only ensuring that your investments meet your retirement goal, but also by ensuring that you can locate where your pension funds are.

– Carla Seely is the COO of Freisenbruch-Meyer, if you would like further details please contact [email protected] or call 441 297 8686.

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