Track down your lost pension savings
If you don’t seek out your old pensions, you could lose them to charities under new government plans, says David Prosser.
If you don't, you could lose them to charities under new government plans.
If you've made contributions to a private pension scheme, but lost touch with your savings, it's time to start tracking the money down. Under new proposals from the government these so-called "dormant assets" thought to total as much as £500m could soon be donated to charities and other good causes.
A similar scheme already applies in the banking sector, where banks and building societies are now required to release cash from accounts that have been left untouched for 15 years or more. The money is passed to organisations such as the Big Lottery Fund and Big Society Capital.
Now the minister for sport and civil society, Tracey Crouch, wants to extend this scheme to include assets held in private pensions, including personal and occupational plans, where the provider has lost touch with the saver for an extended period. Providers would be required to make strenuous efforts to contact the saver before any transfer takes place, but if attempts to re-establish contact fail, the money would be donated.
Ministers are still working on the final details of the scheme, including how long pension assets would have to lie unclaimed to be regarded as dormant. But the government insists savers won't lose out; as in the banking sector, where someone eventually comes forward after pension savings have been transferred, they would still be entitled to claim a refund.
Nevertheless, the proposed scheme is not without problems. As people often only get round to tracking down old savings schemes at the point of their retirement which may be many decades after they have made contributions there are questions about what a refund of transferred savings would cover.
For example, there is the potential to miss out on investment returns on pension assets once they have been transferred out of a supposedly dormant fund. It's been suggested that the ministers put their proposals on hold until the introduction of the pensions dashboard slated for 2019 which will enable savers to view all their pension accounts through a single portal, and hopefully result in fewer people losing touch with their savings.
However, the government is keen to press ahead with the scheme, which it regards as operating successfully in the banking sector. Ministers believe extending similar arrangements to pensions could generate as much as £50m a year for good causes, in addition to the £500m upfront. The sums at stake reflect the sizeable problem with dormant assets in the pensions industry. Below, we look at how to trace your lost pension assets.
Where to startyour sleuthing
If you even suspect you may have opened a pension plan in the past with which you've now lost touch, it's definitely worth making the effort to try tracking it down.
If you think the pension was a plan you took out individually with a provider such as an insurance company a stakeholder or personal pension, for example start by contacting this firm, with as much detail as you can find. Your date of birth and national insurance number should be enough to trace your account, but the more information you have, the better.
If you think the pension was an occupational pension with a former employer, go back to this organisation and ask for details. Give it your national insurance number and the dates at which you worked at the organisation.
Some employers provided access to occupational pensions via individual arrangements, in which case you'll need to contact the company used. But your employer should be able to give you help.
If you're not getting anywhere, try the Pension Tracing Service, a free service that helps people find former employers and pension providers.
This article originally stated that it was work and pensions minister Esther McVey who planned to extend the dormant assets scheme. This has been corrected.
Tax tip of the week
Families who want childcare vouchers must apply now, as the scheme is closing to new applicants from 6 April 2018, and being replaced by tax-free childcare, says Ruth Emery in The Times. The childcare voucher scheme allows you to exchange part of your gross salary in exchange for vouchers, with that portion being exempt from income tax and national insurance contributions.
The deadline is "especially important" for couples where one parent earns more than £100,000 a year, or where one parent does not work, as they will not qualify for the government's new scheme. You can keep getting vouchers if you've joined a scheme and get your first voucher by 5 April 2018, as long as you stay with the same employer and they continue to run the scheme, and you don't take an unpaid career break of longer than a year.
Dons battle to save final-salary scheme
For thousands of workers who have in recent years lost access to defined-benefit pension schemes offering guaranteed retirement benefits, the determination of university lecturers to fight plans for similar changes at the Universities Superannuation Scheme (USS) may not attract much sympathy. But lecturers at 64 universities now taking strike action over the changes insist there is no need for their employers to switch to defined-contribution arrangements, where pension benefits depend on stockmarket performance.
There is little prospect of an early resolution to the dispute. On one side, Universities UK insists the £6bn deficit in the USS means it must take action as a responsible employer. On the other, lecturers argue that this figure is misleading, particularly since all deficit calculations vary dramatically over time; in an era of higher interest rates, this theoretical deficit will fall over time.
Adding fuel to the fire is the round of pay rises awarded to investment managers at the USS lecturers say the fact that the scheme is performing so well diminishes the case for reforming it as well as ongoing controversies over the high salaries of university vice-chancellors.
Without a breakthrough in the negotiations, the first wave of strikes will be followed by further walk-outs in the weeks ahead.