Frozen Pensions Explained

If you’ve had various jobs throughout your career, you may likely have one or several frozen pensions that you’re no longer contributing to. Here, we’ll explain what a frozen pension means, what your options are, whether it’s worth transferring, and where to get expert support to help you find and combine old or forgotten pensions.

What is a frozen pension?

This is an old workplace pension that you’re no longer paying into. When you move jobs or stop working for an employer, contributions to that workplace scheme will also stop. The result is that you could end up with multiple frozen pension pots following your career path.

It might sound simple enough to find frozen pensions, but some may date back years or be complex DB schemes. Even with DC pensions, it can be challenging as past employers go out of business, restructure, or get acquired. The scheme you were paying into may no longer exist in its original format.

What are your options?

Despite the name, a frozen pension doesn’t mean it’s locked away out of reach. Here are some of your options if you have one or more frozen pensions:

• Find your pensions: The first step is to find any frozen pensions you may have. Sometimes this can be relatively straightforward if your company and pension provider are still operating under the same name. However, it can often be challenging to track down all your old pensions over longer periods.

• Transferring pensions: You might consider transferring a frozen pension to another scheme. Common reasons for transferring include finding a provider with lower fees, accessing a wider choice of investments, or more flexible retirement options. However, if you have a DB pension, you need to ensure you won’t be sacrificing any valuable benefits first.

• Consolidation: You could consider combining all your old or frozen pensions with your current scheme. This can provide greater transparency and control with all your retirement savings under one roof, making it easier to manage. Again, DB schemes can be complex to consolidate, and you often need to get advice before making any moves (especially for portfolios over £30,000).

• Accessing a pension: If you’ve already reached the retirement age set out in the scheme where your frozen pension is located, you might want to explore accessing these funds. Depending on the pension structure and your goals, this could be via drawdown, purchasing an annuity, or another method.

• Leave it alone: You might leave these frozen pensions as they are. However, this can make them difficult to manage (especially if you don’t know where they’re located in the first place). This is a straightforward option, but your retirement could suffer if you lack control or transparency.

How to trace a frozen pension

If you’ve lost track of old pensions from previous jobs, you're not alone; it’s estimated there are millions of forgotten frozen pension pots in the UK. You can use the government’s tracing service, but you need to know various details, and it won’t provide any insights into its value, performance, or practical aspects.

That’s where getting help from a qualified pension adviser can really make a difference. An adviser can do the heavy lifting by tracking down your pension, reviewing how it’s invested, and helping you decide whether to leave it where it is or move it to another scheme.

If you’d like a free, no-obligation chat with a pension specialist who can help trace frozen pensions, you can get started here:

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Will a frozen pension continue to grow?

Yes, in most cases, frozen pensions continue to grow, especially if they’re invested in funds or shares. However, the growth depends on the type of pension:

• Defined contribution (DC) pensions: These should remain invested to some degree, potentially growing, depending on performance and fees. However, some schemes will use “lifestyling” to lower your exposure to growth-focused investments and create larger cash positions, possibly limiting any growth.

• Defined benefit (DB) pensions: These typically increase each year based on inflation or a fixed formula, but not always; some are fixed. So, this means a frozen final salary could still grow, but it depends on the specific arrangement.

However, even if your frozen pension is continuing to grow, it’s worth keeping in mind:

• Charges and fees will eat into any growth.

• The pension may not be appropriately invested in line with your goals and risk tolerance.

• You might be able to achieve better growth elsewhere.

• It might not be clear what the specific benefits of holding that pension are.

That’s why reviewing frozen pensions regularly is important, even if you decide not to transfer or make any adjustments.

What happens if you’re overseas?

If you’re overseas or abroad, frozen pensions can become slightly more complex, largely due to the tax implications. Below are the key areas to be aware of with a frozen private pension or State Pension if you’re abroad.

UK State Pension frozen overseas

If you’re eligible for the UK State Pension and you retire abroad, your pension is sometimes frozen at the rate you first receive it overseas. But it will go back up to the current rate if you return to the UK.

However, your State Pension will continue to increase if you’re an expat living in the European Economic Area (EEA), Gibraltar, Switzerland, or countries that have a social security agreement with the UK (excluding Canada and New Zealand).

Here’s a full list of the countries where the UK State Pension is not frozen:

• EEA countries and Switzerland

• Barbados

• Bermuda

• Bosnia-Herzegovina

• Gibraltar

• Guernsey

• Isle of Man

• Israel

• Jamaica

• Jersey

• Kosovo

• Mauritius

• Montenegro

• North Macedonia

• Philippines

• Serbia

• Turkey

• USA

Private pensions frozen overseas

If you have a private or frozen pension from a previous job or personal scheme, you can still access it while living overseas. You can leave it where it is, transfer it to a new provider, a UK-based self-invested personal pension (SIPP), or move it to a Qualifying Recognised Overseas Pension Scheme (QROPS).

However, accessing your pension from abroad may involve additional fees, currency conversion risks, and tax implications depending on your country of residence. Before making any decisions, it's well worth getting regulated financial advice, as pension rules and tax treatment can vary significantly across borders.

Why choose Money Helpdesk for your pension needs?

Whether you're trying to trace an old pension or decide what to do with a frozen pot, we can help make the process easier and clearer. Our expert advisers have experience with all types of workplace and personal pensions, and they can walk you through your options in plain English.

You can start getting your ideal retirement back on track by speaking with one of our independent, FCA-regulated pension advisers. They’ll explain what you can do with your frozen pensions, help you avoid any costly mistakes, and ensure your retirement savings are working as hard as they should.

Here are some more reasons people trust us to help them with their pensions:

• Our advisers specialise in tracking down old frozen pensions

• Your initial pension review is free with no obligation to proceed further

• Access to independent FCA-regulated financial advisers

• They can help navigate tax planning and thresholds in retirement

If you’d like a free, no-obligation chat with a qualified pension expert, you can get started here.