There are some things from our past we’d rather forget. A bad relationship, dodgy outfit choices, or decisions that come back to haunt us. Then, there are some things from our past we should always keep hold of. A special memory, an old workplace pension?
Our own research has revealed that one in ten Brits don’t know if they have a pension from a previous job1. And with reports estimating the value of lost pensions to be worth a whopping 20 billion pounds2, how much extra income could you be missing out on in retirement by misplacing an old pension?
Here, we reveal everything you need to know about old and lost pensions including how to find them and how to make the most of your savings for your best possible future.
Why could I have more than one pension?
One word: Auto-enrolment.
It’s been the buzz word around pensions for the last few years. That’s because it’s now compulsory for your employer to enrol you in a workplace pension scheme if you are at least 22 and earn a minimum of £10,000 a year. So, if you are employed it’s likely you have a pension.
In fact, it’s estimated that more than 10 million3 of us are now paying into a pension thanks to the scheme. With both employee and employer making contributions, as well as top ups from the government in the form of tax relief, it’s a pretty nifty set up. Especially if you have no other retirement savings.
Did you know it is your responsibility to manage and keep on top of the workplace pensions you accumulate throughout your career?
When you move jobs, you stop paying into the pension set up by your previous employer and start paying into the pension provided by your new workplace. This means as you go through your working life, you could end up with a stash of pensions as you move from job to job.
And with 75% of the nation admitting they were unaware that it is their responsibility to manage old pensions when they move jobs, the number of lost pensions could continue to grow. And savers just like you could miss out on thousands of pounds of hard-earned cash for their retirement.
How do I find an old pension?
The best way to find old and forgotten pensions is through the government pension tracing service. You’ll need the name of an employer or pension provider to use the service. The service will not be able to tell you whether you definitely have a pension, or what its value is. You’ll need to contact the provider directly to confirm whether you do indeed have a pension with them.
There are other ways to track down pensions you might have forgotten about. You could dig out old pay slips which may reveal whether you were making pension contributions and the name of the scheme you were paying into. Or, your previous employers may be able to help.
Our research revealed that worryingly, more than half (54%) of 55-64-year olds haven’t yet worked out how to access the details of their old workplace pension. Despite the fact that they are the most likely age group to start using this fund in the near future.
Getting into good habits keeping on top of old pensions now, will mean you’re one step ahead when it comes to planning for your retirement. And you’ll be able to access your savings when you need them the most.
How do I manage my old pensions?
In the finance industry we’ve been excited by the prospect of a Pensions Dashboard being developed and launched by the government. The promised land of seeing all our pensions in one place, making keeping on top of our retirement savings a doddle.
And the nation agreed. Two-thirds (65%) say that they would find it useful to see all their pensions, including those from previous jobs, in one place, as it would make it easier to keep on top of their total value.
Yet despite Queen Elizabeth’s announcement in October 2019 that “…measures will be brought forward to provide simpler oversight of pension savings”, no further clarity has been provided as to when we can expect the Pensions Dashboard to launch.
So, what are your options now for managing old pensions once you’ve found them?
The key is to get the most out of your old pensions as possible. That could be by combining two or more together or moving your savings to a scheme with lower charges and better performance. A better pension for you could also be one that has a specific investment portfolio and remains tailored to your goals for the future. Choosing the right option for you now, could make a huge difference to your retirement income.
Your choices for managing old pensions:
Manage investments yourself
With a lot of time on your hands and good financial knowledge, you could choose to manage your investments yourself. With the DIY approach the responsibility of managing your retirement falls firmly on your shoulders. From how your savings will be invested to regularly reviewing performance and charges, there’s lots you’ll need to think about to ensure the size of your pot is everything you need for your retirement. And your savings won’t have the added benefit of protection from the Financial Ombudsmen Service.
You could opt to use an online tool to keep on top of your savings. While it’s great that there are more online options emerging for moving or consolidating pensions, it can come with huge risk. If it feels too easy to move your pension, such as only taking a couple of clicks to complete the process, then it’s time to think twice about whether this is the right move for your hard-earned savings.
Whether you are thinking about taking the DIY or online approach, don’t rush into moving or consolidating old pensions. Before making any big decisions to jump ship from your current provider you should confidently know: how your pension will be invested, the fees charged, and how your new scheme compares to the old one. Plus, pensions often have valuable benefits and guarantees attached to them. And when moving to a new scheme these would be lost.
Ask an expert to manage your old pensions for you…
…like an independent, regulated financial adviser. An adviser can reveal how much your pension is worth now, the charges you are paying and how well your current savings are performing. And they can help you to understand the options available to you. This could include transferring old pensions to a modern scheme that is properly tailored to you or combining some of your pensions into one scheme. Both of which could make a big difference to the amount you have for your retirement.
People who take financial advice are, on average, £47,706 better off4
A regulated adviser will let you know whether your pension could be better off in a new scheme or if it is fine staying where it is. Something an online portal cannot do.
It’s important that old pensions are reviewed regularly. A financial adviser will also manage your savings on an on-gong basis. And make sure how your money is invested remains tailored to achieving your best possible future.
If you’re now wondering…where did I leave that pension paperwork? There’s no time like the present to get your savings sorted. And if you’d like a hand from our pension egg heads, just let us know.
1Survey of 2,000 employed UK residents aged 25 or over, carried out in September 2019
4What it’s worth, published by ILC UK (November 2019)