What happens to my salary related occupational pension if I have been in my current job more than two years?

If you have been a member of a salary related pension for more than two years you are entitled to a deferred pension. This will be paid to you when you retire by the scheme you have left. The amount you get will depend on the pensionable salary you were getting when you left the job, your length of service and the scheme's accrual rate – just as if you were retiring.

The pension is then uprated for each year you defer it, to take some account of inflation. The way this is done is very complicated as the rules have changed several times.

If the scheme was contracted out before 1997, the pension you have built up will be divided in two (not in equal halves however). The part that you get instead of the State Second Pension is treated differently from the rest, and will be up-rated in different ways depending on the rules that applied during the years in which it was deferred. The biggest change occurred in 1997 when S2P replaced SERPS as the State Second Pension.

The rest of the pension (and all of the pension in a scheme that is not contracted out) should be uprated by inflation up to a maximum of five per cent for each year betweem 1997 and April 2006, and from April 2006 by inflation up to a maximum of 2.5 per cent. This is called Limited Price Inflation(LPI).

As an alternative to leaving your money in your old employer's scheme you may be able to transfer it to your new employer's scheme. This is covered by the next few questions.

There's more about deferred pensions on the OPAS website.