What can I do with my frozen defined contribution pension?

A ‘frozen pension’ means one that isn’t currently receiving any payments. It can be from a previous employer or a personal pension.

A frozen defined contribution pension can still grow even if it’s not receiving regular contributions. As it’s still invested, its value will move depending on the performance of your funds. In a personal pension, fees and market volatility can reduce your pension’s value, meaning it could decrease even while frozen.

If you’re deciding what to do with your pension while it’s frozen, keeping an eye on annual statements and fund performance from your pension provider could help you make your decision.

Depending on the type of pension you have, you could potentially transfer your frozen pension. Understanding your pension type could help you make that decision, as well as assessing the whole picture. Considering factors like investment options, fees, charges, and retirement flexibility can help you decide whether transferring your pension might be a good idea. You may also find that your provider has an exit fee for transferring, so getting all the facts before deciding can be helpful.

With some pensions, you’ll need to get advice before transferring. If you have a defined benefit pension or certain money purchase pensions, you’re legally required to take financial advice before transferring if the value of your pension is over £30,000. We still recommend getting advice for anything below £30,000. There may be a charge for this service. Find out more about defined benefit pension transfers.

If you have a few frozen pensions, you might decide to transfer them all into your current workplace or personal pension, or you may decide to have a couple dotted around. Having one overall pension can benefit some people as:

• you’ll only receive one pension statement a year.
• you know where all of your money is, making retirement planning simpler.
• you’re only going to be paying charges on one pension. 

If you’re wanting to transfer all of your pensions into one, or you think you might have lost track of some of them, we can do some of the legwork for you as part of our Find and Combine service. We'll check your pensions for certain valuable benefits you could lose by transferring, and fees you could be charged. We'll also help you check for any other benefits that might be lost. 

You may decide to leave your frozen defined contribution pension exactly where it is. All the money in your pension will remain invested so it will fluctuate in line with market conditions. Then when you get to retirement age (from age 55, rising to 57 in 2028), you can choose to start taking money from it. However before that, you can also make any changes to the pension (as long as it allows you) like switching funds, starting to pay into it again or transferring.

Depending on the type of pension you have you’ll have different options as to how you can take money. You’ll need to be at least 55 (rising to 57 in 2028), but you don’t necessarily have to be ‘retired’. Here are a few of the options that might be available to you:

• Flexi-access drawdown
• Annuity
• Lump sums
• 25% tax-free cash.

You can find out more about retirement options and what they mean in our article.

If you have a frozen pension you might find that opening a newer one and transferring could be a good option for you. This is because a lot of the older pensions can come with high charges and not as many investment options. Some also lack the full range of retirement options.