The current labour shortage and subsequent increase in salary levels has forced employers to focus on employee benefits to attract and retain employees. Pensions are one of the most important aspects of these packages but their value decreases if, after a few years, the employee leaves to go elsewhere. Naturally enough, the incentive to stay lies in the overall value of the pension package over the years.

A Family Money reader wrote to express his dissatisfaction with the existing rules relating to occupational pension schemes. He believes that contributory and non-contributory occupational pensions inhibit transfer between jobs, because the relevant employee would not be able to take their accumulated benefits with them to the proposed new job. Legislation provides for the transfer of some of the accumulated benefits but not all, he says.

"As you can guess, this has major implications, not only for employees but employers, as well. It means employees are `stuck' in a job that they want to change out of, against their own wishes and, maybe, against the wishes of their employer as well," he says.

Ms Mary Hutch of the Pensions Board says the situation for "early leavers" from occupational pension schemes is much better now than it was prior to the Pensions Act of 1990. Before the Act there were no vested rights for early leavers and many were forced to remain with the same employer against their wishes.

Part III of the Act ensures that there are preserved benefit entitlements for members in respect of service in their pension schemes after January 1st, 1991.

To qualify for preserved benefit, on termination of relevant employment the scheme member must have completed a minimum of five years' qualifying service, at least two of which must have been completed after January 1st, 1991. It is likely that this requirement will be reduced to two years in the Pensions Bill, expected during the summer, says Ms Hutch.

Members leaving a scheme have three main choices: they may have their fund preserved in the scheme to be drawn down at age 65; transfer to their new employer's scheme; or transfer to a policy or contract with an insurance company called a buyout bond. Members do not have the right to transfer payment of non-preserved benefits or those based on service before January 1st, 1991. A member's right to any entitlements prior to this date depends on the rules of the particular scheme.

Generally, a pension scheme's rules determine the specifics of accumulated benefits but the longer an individual is in a scheme the more benefit is built up. In general, the amount an individual may take with them depends on whether they were in a defined-benefit or a defined-contribution scheme and their years of service.

The amount allowed for transfer from, or preservation of, a defined benefit scheme is calculated by reference to a formula. However, those leaving from a defined benefit scheme, but preserving it, will have their benefit revalued every year based on Consumer Price Index statistics. Those leaving a defined contribution scheme have a simpler calculation to make - "whatever is in the pot goes with you", says Ms Hutch. Despite this, any expenses authorised by the scheme's rules may be deducted before the funds are released.

The Pensions Board has said it hopes that preserved benefit entitlements will be extended for pre-1991 benefits by way of voluntary agreements between employees and their employers.

At the moment, funds from an occupational pension scheme may not be transferred to a personal pension scheme.

An information booklet on this subject, What happens to my pension if I leave? is available free from the Pensions Board - tel: (01) 676 2622 or web: www.pensionsboard.ie