Switching jobs is common, but it can bring questions about what happens to your company pension (bAV) contributions. Here are the main options, as well as the potential costs and recommendations for maintaining your pension when transitioning to a new employer.
1. Capital Transfer
When you leave an employer, one option is to transfer the accumulated capital in your bAV to your new employer's pension plan. This process is known as Kapitalübertragung or capital transfer. Essentially, your current balance is moved to a new contract with your next employer’s pension provider. While this can be a way to consolidate your retirement savings, keep in mind that such transfers may incur high operational effort for your employer.
It’s important to be aware that frequent job changes and multiple capital transfers may lead to substantial costs. At Feather, however, our policy is designed to minimize these high upfront costs, making it more cost-effective for you in the long run.
2. Contract Takeover
Another, often preferable, option is a contract takeover. With this approach, your new employer may choose to simply take over your existing bAV contract, allowing you to continue with the same policy and avoid any additional fees associated with starting a new one. This option is usually the best choice financially, as it helps you avoid the repeated fees involved with opening and closing multiple pension contracts.
Tip: Before assuming a capital transfer, talk to your new employer about the possibility of taking over your current contract. Many employers are open to this solution, as it can be more beneficial for employees, helping you to keep growing your pension savings without additional charges.
3. The Costs of Switching Too Often
It’s worth noting that switching pension providers (signing new contracts) multiple times can add up financially.
Each new setup often comes with sales fees for the broker or higher running fees that can impact your accumulated savings. This is why a contract takeover is generally the more economical choice.
At Feather, our policies are designed to avoid these costly upfront fees, giving you the flexibility to maintain your savings without being burdened by unnecessary expenses.