Around
5 million people could be missing out on income when they retire
because they have lost track of some of their pensions savings, research
has suggested. According to the charity Age UK, nearly a quarter of
adults have overlooked at least one pension, pouring confusion on to
their retirement saving plans.
The main problem seems to be that most people no longer do a job for life, and moving from employer to employer can result in a string of small pension pots, which even if they do not go astray can end up being worth less than if the money was held all in one place.
Age UK's head of services, Lucy Harmer, says it is vital that people take time to work out what pensions they are owed: "We strongly advise people to seriously think about planning for retirement and the kind of lifestyle they want – it's never too early."
The government offers an online pensions tracing service, which you can also access by phone (0845 6002 537). It will ask for your national insurance number and about the employer you worked for when you had the pension, what your job title was, and for contact details for the employer and/or the pension provider. You do not need to supply all of the details, but the more information you can provide the higher the chance of it being able to track down your pension.
Alternatively, you could contact your previous employer to ask for details of its pension provider, says Lucy Haughey, director of the Plan B Partnership. "You can then contact the pension provider for what is known as a 'pension update'," she says. "Do this for every plan you think you have." She says clients who contact her have forgotten pensions worth about £30,000 on average.
"Please seek advice from a regulated pensions adviser as he/she can work with you and research your options, one of which may be to reinvest the frozen pensions in your existing pension pot," Haughey says.
In some cases, you may be better advised to leave it where it is, either because there are high penalties for switching or there are benefits you might sacrifice if you switch.
"Some older policies include guaranteed annuity rates, which are generally very valuable, especially in today's environment of low annuity rates," says Alasdair Buchanan of pension firm Scottish Life. "It can often be worth getting expert help – the cost of the advice can be considerably less than the cost of getting it wrong."
This is especially true if any of the pensions is a final salary scheme, where your final payments are based on your earnings rather than the value of your fund.
"This last point is really important. For some people, a platform which allows them to run their pension and Isa in one place will be a real boon; for others it will just be about getting an online valuation at the click of a button," he says. "Many pensions have pretty mediocre administration, so if you're looking for a single pension to consolidate your others into, make sure you choose one that won't be a right pain to deal with."
The pension that ticks all the boxes may be one of the ones you already have or something completely new.
If you don't want to consolidate your funds, make sure you have written details somewhere of all of the schemes you are invested in, so that if anyone else ever has to manage your affairs they can find all of your money.
Colin Russell, partner at law firm Manches, says losing track of a pension will not just cause problems for you, but can also have an impact on your partner. "The spouse of the deceased also misses out on benefiting from their partner's pension pot if it has been forgotten about," he says. "Drafting a will with a solicitor is a good opportunity to review all your finances with your partner and recap where you have a pension, even if you no longer pay into it."
The main problem seems to be that most people no longer do a job for life, and moving from employer to employer can result in a string of small pension pots, which even if they do not go astray can end up being worth less than if the money was held all in one place.
Age UK's head of services, Lucy Harmer, says it is vital that people take time to work out what pensions they are owed: "We strongly advise people to seriously think about planning for retirement and the kind of lifestyle they want – it's never too early."
How do I find a missing pension?
Start in your filing cabinet. Dig out all your old paperwork and see if you have details of any schemes you had forgotten about. If the paperwork carries a former postal address for you, begin by writing to the scheme provider giving your current contact details.The government offers an online pensions tracing service, which you can also access by phone (0845 6002 537). It will ask for your national insurance number and about the employer you worked for when you had the pension, what your job title was, and for contact details for the employer and/or the pension provider. You do not need to supply all of the details, but the more information you can provide the higher the chance of it being able to track down your pension.
Alternatively, you could contact your previous employer to ask for details of its pension provider, says Lucy Haughey, director of the Plan B Partnership. "You can then contact the pension provider for what is known as a 'pension update'," she says. "Do this for every plan you think you have." She says clients who contact her have forgotten pensions worth about £30,000 on average.
Can I move my money?
You should be able to, but there could be exit penalties on your fund so you need to make sure these do not cancel out any benefits gained by moving. When you have tracked down all your schemes, you can contact your providers to get a quote for the transfer value of the pension pots. Ask for a statement, which should include details of any penalties you will face as well a final value."Please seek advice from a regulated pensions adviser as he/she can work with you and research your options, one of which may be to reinvest the frozen pensions in your existing pension pot," Haughey says.
In some cases, you may be better advised to leave it where it is, either because there are high penalties for switching or there are benefits you might sacrifice if you switch.
"Some older policies include guaranteed annuity rates, which are generally very valuable, especially in today's environment of low annuity rates," says Alasdair Buchanan of pension firm Scottish Life. "It can often be worth getting expert help – the cost of the advice can be considerably less than the cost of getting it wrong."
This is especially true if any of the pensions is a final salary scheme, where your final payments are based on your earnings rather than the value of your fund.
Where should I put it?
Tom McPhail, pensions expert at IFAs Hargreaves Lansdown, says if you decide to consolidate you should look for a pension offering three things: the right investment choices to meet your needs, competitive charges, and a good user experience."This last point is really important. For some people, a platform which allows them to run their pension and Isa in one place will be a real boon; for others it will just be about getting an online valuation at the click of a button," he says. "Many pensions have pretty mediocre administration, so if you're looking for a single pension to consolidate your others into, make sure you choose one that won't be a right pain to deal with."
The pension that ticks all the boxes may be one of the ones you already have or something completely new.
How do I arrange the transfer?
Once you have tracked down your pensions and made sure it is a good idea to transfer them, ask your chosen pension provider to begin the process of collecting the money from your other fund or funds. The provider(s) you are switching away from may send you some forms to sign before the transfer can be completed.What else can I do?
In future you could take your pension with you when you move jobs. "Wherever possible, keep one pension that you consolidate any others into," McPhail says. "So whenever you leave an employment, consider transferring that preserved pension into one you can take with you from job to job."If you don't want to consolidate your funds, make sure you have written details somewhere of all of the schemes you are invested in, so that if anyone else ever has to manage your affairs they can find all of your money.
Colin Russell, partner at law firm Manches, says losing track of a pension will not just cause problems for you, but can also have an impact on your partner. "The spouse of the deceased also misses out on benefiting from their partner's pension pot if it has been forgotten about," he says. "Drafting a will with a solicitor is a good opportunity to review all your finances with your partner and recap where you have a pension, even if you no longer pay into it."
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