Can I change my workplace pension provider?

A workplace pension is typically something most employees don't take an active interest in. Our employer sets it up on our behalf, we pay our contributions into it and our employer pays in their contributions too.

We tend to just leave it to one side and let it do its thing, mainly because we don’t really understand how our workplace pension works.

But a common misconception about workplace pensions is that you have to keep your pension with the provider setup by your employer.

Your employer will negotiate the terms of the workplace pension and your pension contributions will typically be paid into a default pension plan. This is a generic pension fund that isn’t personalised to each employee. These funds also tend to be more cost-effective for your employer and also you.

For many members of a workplace pension, your default pension will be good enough for simply building up your contributions and investment growth over your working life.

But for people who are more savvy and want to maximise the investment growth potential in their workplace pension, they might want to look at other options.

It is down to employer discretion as to whether or not you can change your workplace pension provider. Your employer could redirect your personal and employer pension contributions to a new provider.

In this instance, you would be responsible for setting up your own personal pension that your employer pays into. This is typically not that common as it involves additional admin for your employer.

Alternatives to changing your workplace pension provider

Do intermittent transfers to a separate personal pension

Double check with your employer or the workplace pension provider, but partial pension transfers are typically allowed from one pension to another.

So an option could be to build up funds in your current workplace pension and then regularly transfer some of it over to your preferred provider. You need to check the rules on this as you will need to keep some money in your workplace pension to keep it open so that future contributions can be paid in. Some providers require a minimum amount to be kept in the pension, others will require a small amount such as £10.

Bear in mind that a partial pension transfer can be quite manual so consider how often you would want to do this.

Switch investments with your current workplace pension provider

Most employees just stick with the default investment they are put into when their workplace pension is setup. But you do not have to stick with this investment.

If you’re comfortable researching investments, look at the range of investments available with your workplace pension provider. You may find something more suitable that has a better match to your attitude to risk.

Make sure you compare fees. Default funds are low-cost and if you’re an employee of a large company, you may be getting discounted charges that your employer has negotiated on your behalf.

Just so you’re aware, the maximum charge of a workplace pension’s default fund is 0.75%.

But it could be lower. So switching out of the default fund could mean higher charges.

Summary

If you take an active interest in your pension, then sticking with your workplace pension’s default option may not suit you.

Speak to your employer to see if you’re able to get your contributions paid to a different provider or look at other options such as partial transfers or switching investments with your current provider.