Don't forget any of your old pension pots
A 3 minute read
Don't forget any of your old pension pots
If you have old pension pots from previously employments, then chances are you could have lost track of these or forgotten about them altogether. The Association of British Insurers (ABI) say there’s around £19 billion to be claimed from lost pensions - that’s a lot of money you could be throwing away.
Our lives have changed quite significantly. On average, it’s typical a worker will have 11 different jobs during their lifetime.
This is a particular problem for younger people, who tend to move around more frequently, and as we move from one employer to the next, we inevitably build up new pension funds.
That’s why it’s actually quite common to lose a pension. You might know your pension exists, but you’ve forgotten details like the provider or pension number. Or, over time, you’ve just lost all track of it.
Don’t put off tracing any pots
If you’re putting off tracing your pensions because you think it’s a lot of work, or that your lost pension isn’t worth it, think again.
It’s actually a lot easier and more-straight forward than you might think, and after several years of growth, you could be surprised at how much money you’ll find in your pot.
- With a lost pension, you probably don’t know how your money is being invested, what growth rate it’s achieving or what fees you’re paying on it. All these factors affect how much that fund will be worth when you retire. The sooner you can track it down, the sooner you can take control of it.
- However far you are from retirement, it’s important to know if your savings are on track. If you don’t know where all your savings are, it’s unlikely you’ll have a clear understanding of what you have built up so far.
So, how do you trace your old pensions?
Where to start depends on how much you already know about your lost pension. Every pension provider is obliged to send scheme members an annual statement, so go through your pension shoebox of shame to see what paperwork is stuffed away.
If you CAN find out who your pension provider is, you can get in touch with them directly. It’ll help if you can give them your:
- Date of birth
- National Insurance number
- Pension policy number
- Relevant dates, such as when you think the pension was set up and when you last contributed.
Don’t worry if you don’t have all of this information - just supply what you can. If you DON’T know who your pension provider is, get in contact with your previous employer - they should be able to give you the pension provides details and tell you how to get in touch with them.
If you can’t find any of this information, don’t worry - all is not lost. The government has a free service called The Pension Tracing Service, that can help. Via their website, you can enter the name of your former employer and receive contact details to reunite you with your lost savings. You can also access the service by phone.
What should you do when you find your lost pension?
For some, simply knowing where your pension is may be enough and you may be happy to leave your lost pension invested where it is. You will need to make sure though that you update the provider with you contact information, so they can keep you informed about its progress and you don’t lose track of it again.
It is possible to move the money from your lost pensions into your current pension. Working out if this is a good idea, will depend on a number of factors, including what type of pensions they are, how much they are worth, how well they are being managed, and whether they currently have any special guarantees attached.
First of all, the most important thing to understand is whether or not your pension is a defined benefit scheme or a defined contribution scheme.
Defined benefit schemes (also known as final salary) schemes, mean you are guaranteed a certain pension value (usually a percentage of your final salary) when you eventually retire.
This means the scheme has to pay you the amount you’re entitled to, regardless of what happens to the underlying funds.
Generally, it’s not a good idea to transfer from a final salary scheme, as you would be giving up a fixed income for a less certain one and it’s possible you’ll be worse off. It is also usually a legal requirement to seek independent advice before transferring a final salary pension - as this is a big decision and cannot be reversed.
If the pension is a defined contribution pension, then it’s a bit simpler to move your money into your current pot. By moving them altogether it will help you to keep track of all your retirement savings, so it’s easier to manage and you’ll have a better understanding of what you have built up so far.
Before you do anything though, you need to check the scheme details. The main aspect to consider, is what might be lost. Some older pension polices could have valuable guarantees, such as guaranteed minimum pensions or protected higher tax-free cash percentages.
These could be lost when you transfer them. Each one of your pots charges you an annual management fee, so compare the fund charges too. Some pension pots may also have some exit fees.
If you’re unsure of what is right for you, it’s worth speaking to a financial adviser.
How can you make sure you don’t lose track again in the future?
Make sure you hold on to any pension documents you’re given and keep a note of your pension policy number. If you move address, add your pension provider to the list of companies you need to inform.
If you change employers, remember that payments into your existing pension will stop, and your new employer will usually set up a new pension for you. This means you’ll have two (or more) pensions to keep track of.
Remember, although it may be easier to manage all of your pots by having them all in one place - combining your pension pots is not a decision that should be taken lightly.
For some people it will absolutely be the right thing to do, for others, some caution will be needed. As always, it is best to seek professional financial advice before making any large financial decisions.