The Government has confirmed it will only allow short service refunds of 30 days from October 2015.
Currently, employers and members of defined contribution schemes can get a refund on contributions with up to two years’ service, but this will be cut to 30 days from next year.
Defined benefit schemes retain the right to make refunds, while personal pension schemes have never had the option.
The Government first announced its intentions to change the rules around short service refunds in 2011. It says about 20,000 refunds are made every year, a figure that was predicted to grow with the full roll out of auto-enrolment. The changes are part of the Pensions Act 2014.
Pensions minister Steve Webb says: “The days of people spending their entire career with one employer are largely over. Today, the average Briton has eleven different jobs in their lifetime and we need the rules to reflect this reality.
“If people change jobs regularly and ‘cash out’ their pension each time, they stand no chance of building up a decent pension pot. By abolishing short service refunds and developing plans for automatic transfers to help people keep track of their savings, this Government will build on its record of helping millions of people save more for a brighter, more comfortable retirement.”