Many of us are missing out on pensions from previous employers. Here’s how to find those old and lost pensions and make sure you’re not one of them
A pensions expert has warned that millions of people could be missing out on cash sitting in old and lost pension pots from previous employers, at a time when the cost of living and higher inflation threatens to spoil their retirement plans.
Ray Black, pensions expert and chartered financial advisor at Money Minder, says as more people move around in jobs, they could find that when they come to retire, they have lost track of their funds sitting in multiple pension plans. And for those who are self-employed, it could get more complicated as they’ll likely have a mixture of personal and private pensions.
Today, the average person has 11 jobs in their lifetime, and nearly half (46%) of UK pension holders have lost track of their pension pots. Recent research from a pension policy institute found the total value of these lost pension pots had grown to £26.6 billion in 2022.
"Today, the average person has 11 jobs in their lifetime and nearly half of UK pension holders have lost track of their pension pots"
“It’s entirely unlikely that people will stay in the same job for their entire working lives, or even stay with one employer for more than 20 years,” said Ray.
“In fact, the number of small pension pots with less than £1,000 in them is rising as people move between jobs more. And the speed at which pension pots are being classified as lost is also increasing, with an extra 1.2 million having been classed as missing between 2018 and 2022.
“There is a huge lack of knowledge when it comes to whether people should consolidate their pensions or not and how to trace them.
“While consolidation will not always be the best option for everyone, it could undoubtedly bring some people much closer to their money, increasing their sense of ownership and control, and potentially setting them up for a better retirement.”
Here's what to consider when deciding whether to merge your pension pots and how to best prepare for a comfortable retirement.
Ensure all providers know of address changes
Make sure to let pension providers know if you've moved
Owning multiple pensions can lead to a lot of paperwork from different companies and, as the average Brit moves home at least eight times in their lifetime, it’s easy to have your post going missing if you move around often. It’s therefore crucial to keep your details updated to not miss out on vital information through the post.
It’s also advisable to keep a record of statements when they arrive and file them away somewhere safe. This will save a lot of admin further down the line and could avoid an unnecessary headache when you come to retire—at a time in your life when you want things to be less challenging.
Contact old employers
If you don’t have a recent pension statement, the best way to start tracking down the details of your previous pension plans is to trace the provider, if you know who they are. This will help you find the current value of your pension and other benefits you may be entitled to.
If you don’t remember who the pension provider is, then your former employers should be able to tell you who provides their workplace pensions.
"The government’s Pension Tracing Service is also a useful tool to track down the administrators of pension schemes"
The government’s Pension Tracing Service is also a useful tool to track down the administrators of pension schemes. This is a free database of all UK pension providers and allows you to search for pension providers just with your previous employer’s name. It won’t, of course, tell you how much is in your own pension pot, but it’ll bring you closer to finding out.
Understand your current pension value
Whether or not you decide to merge your pensions, you should at least know how much is in each
Having multiple pension pots could also be costing you financially—through management fees or poor investment performance. Therefore, against the backdrop of the high cost of living, it could be advisable for someone to consolidate all of their pots into one.
If you decide not to merge them, previous statements and any paperwork you have filed away will help you piece together how much money you have in various plans. This will help you work out how much you will be entitled to in retirement, which could be a nice surprise when you have pension pots you’ve forgotten about.
Think about retirement early
While it’s understandable that people may forget how many pension pots they’ve accrued over the years, they risk missing out on those savings altogether—at a time when higher inflation threatens to spoil their retirement plans.
Millennials shouldn’t disregard their pension just because it’s theoretically years away, so keep track of your pension plans as you change jobs through your 20s and 30s. No matter whether you merge all your pots or not, this will give you a better idea of how much money you could have when you are ready to retire.
"No matter whether you merge all your pots or not, this will give you a better idea of how much money you could have when you are ready to retire"
Planning for your retirement early will also help you make decisions well in advance about the lifestyle you want once you hit pension age, rather than leaving it until you are nearing your 50s and unable to track down all of your pots.
Use a drawdown calculator to understand your options
You can use a drawdown calculator to work out how much you'll receive year on year
If you are still unsure of what to do with your pension plans, then getting the right advice would be beneficial to guarantee the retired life that you want. Tools like a pension drawdown calculator, with free personalised reports available, will help work out how your pension fund could be used to provide a suitable income during retirement.
You will always be in a much better position when you make those informed decisions, having understood the options that are available to you.
Ray Black co-founded Money Minder with his wife Karron Black in 1999, offering independent financial advice on investments and pensions, and giving individuals peace of mind.
Since its launch, Money Minder has been the provider of investment and retirement planning workshops to the general public and since 2004 for NHS staff in Lincolnshire. Money Minder has also been included as a recommended provider on www.moneysavingexpert.com.
Ray is one of few UK advisers to hold a Master’s in Business and Financial Planning and is also a fellow of The Personal Finance Society.
Read more: When can I afford to retire?
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