All your pension tracing questions answered as over £31 billion sits in pension pots across the UK.
State pension age to be reviewed by UK Government amid fears that 45% of workers are not saving
Saving for a pension is an important part of our finances, allowing us to save a healthy sum of money to have a comfortable retirement later on down the line. Despite this, an estimated £31.1 billion is sitting in pension pots across the UK that have been forgotten about or left unclaimed, with an average of around £9,500 per pot.
Tracking down lost pensions is much easier than you think. The UK Government has a dedicated online portal to help get your started and all you have to do is enter a few details such as your name, past employers and National Insurance number.
To help people understand why these pensions may be lost and offer tips on tracking them down, Liz Hunter, Commercial Director at MoneyExpert, answers the key pension tracing questions so that you can make sure you claim all the money you’ve saved throughout your career.
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Think back on your work history
Make a list of all your previous employers. If you struggle to remember them, digging out an old CV could help – do you have one saved on your computer or somewhere in your email’s ‘sent’ folder from a past application? For most of these jobs – especially those that were full-time – you likely paid into a pension.
Dig out the paperwork
Now you have a list of previous employers, take a look through your old paperwork and try to find a pension statement to match each role. If you can, write down the name of the pension scheme/provider and any reference or membership numbers.
Do some detective work
Do you have gaps on your list of pensions? Don’t worry. You’ve got a few options. You could contact your previous employer and ask for the details of their workplace pension. Be prepared to share your dates of employment and job title with them. Once you’ve got the details, add them to your list.
If you still feel you’re missing some pensions, you could use the government’s free Pension Tracing Service. Their service is easy to use, but you will need the name of an employer or a pension provider to use it. Once your pensions are located, a pension specialist will contact you to report back on what they’ve found.
Get in touch
At this point, you should have a list of all your pensions. Next, you’ll want to contact the provider and check that they have a record of your pension plan. If they do, find out how much is in your pot and ask them to send you an up-to-date statement. You’ll also want to ensure that your contact details are current so that you can easily access your accounts when needed.
Extra tips
Some pension providers might have changed their names or joined forces with other companies. If you can’t find your pension even though you have a statement, you might need to do some extra searching. Try searching online for the pension provider’s name or contacting the Pensions Regulator.
Once you have all the details of your pensions, it could be helpful to type up all the details and file them away (or save them on your computer) for future reference.
Should I consolidate my pension into one fund or keep them separate?
Now that you’ve located all your lost pensions, you might discover that you have multiple pots, which can be overwhelming, potentially costly and you may find that they aren’t performing to their full potential.
Pension consolidation, generally speaking, is a great solution. This is when you combine all (or some) of these different pension pots into one single pension to make things easier to track and manage.
By consolidating your pensions, you can:
- Simplify management: Managing one pension pot is easier than managing several. Although consolidating your pension pots will take some admin time in the short term, it’s likely to save you time over the long term.
- Receive a single pension payment: Once you retire, having several pension pots means you’d receive several smaller pension payments. By consolidating your pensions, you’ll receive one larger payment.
- Reduce costs: Every pension plan comes with various fees. By having several pots, you’ll be paying these fees to multiple providers. Consolidating your pension pot means you’ll only pay one set of fees.
- Get a better return: Some of your pots are likely to be outperforming others. Transferring all of your pensions into one of your better-performing schemes could mean you make a higher return on your investment over time. Plus, larger pension pots often have access to a wider range of investment funds.
Potential drawbacks of consolidating pensions
- Lose benefits: If any of your existing pension schemes offer a final salary scheme, guaranteed annuity rates or guaranteed growth rates, these are highly valuable benefits. If you leave these schemes, there’s no guarantee you’ll get the same benefits elsewhere.
- Exit fees and penalties: While consolidating your pensions generally means you’ll pay fewer fees in the long term, you could face some fees & penalties in the short term. Check the small print of each of your schemes and note down any exit fees and penalties.
- Risk: You can often reduce the amount of fees you pay, and gain access to better investment options, by consolidating your pension. But it’s important to note that this isn’t a one-size-fits-all rule, and depending on who you transfer your pension to, you could end up worse off.
Consolidation warning
Before you begin the pension consolidation process, it’s important that you know and compare the features and benefits of the plan(s) you are thinking of transferring to. For free and impartial advice on choosing the right one for you, get in touch with Pension Wise by MoneyHelper.
