Don’t forget your old pension hoards
If you’ve lost track of old pensions from previous jobs, you’re not alone. David Prosser explains how to track them down.
If you've lost track of old pensions from previous jobs, you're not alone.
As many as seven million Britons could have pension savings with which they've lost touch, a survey suggests, with little evidence that the problem is easing, despite repeated warnings about the scale of the issue. Figures from the insurance company Aegon also show that 64% of savers now have more than one private pension fund, potentially from several employers or individual arrangements. Of this group, 22% have lost track of at least one of their funds slightly more than a year ago.
The issue is a longstanding problem, with pension savers frequently losing touch with pension cash most commonly because they move home and fail to give providers their new address. However, the recent trend towards people changing job more frequently the average employee now has 11 jobs during their career has exacerbated the issue. The introduction of auto-enrolment, under which all employees join their workplace pension scheme unless they specifically opt out, has also been a contributory factor to the scale of the lost-pension problem. Many workers are accumulating several relatively small funds via a series of employers, particularly when they are younger, and struggle to stay on top of the savings they have made.
How to track down old pension funds
It was partly this issue that prompted the government to announce two years ago that it would force the pension industry to introduce a digital "pension dashboard" by 2019. All pension providers, including employers and private pension companies, would have to feed their member data into the dashboard, enabling savers to see all their pensions on a single online page. Progress towards the dashboard has been slow, however, and there is widespread concern that the deadline will be missed.
In the meantime, anyone who suspects they may have old pension savings should take some simple steps to track them down. Start by contacting any former employers that are not sending you regular pensions information in order to establish whether you made pension provision with them. If you're not sure how to get in touch with old employers' pension schemes, the government maintains a tracing service online. Similarly, if you have saved into a private pension with an insurance company or fund manager, for example but no longer receive updates, it's important to re-establish contact with the provider. If you're not sure how to do that, the government's tracing service can help.
Consider putting all your pensions in one place
Once you've located old pension funds, you might want to take the time to review your options. To keep pension planning simple, it may make sense to transfer older savings particularly smaller funds of cash into asingle consolidated plan. However, don't make a final decision until you've understood the implications of switching, which could be disadvantageous.
For example, if you have money in a final-salary scheme, where your benefits in retirement are guaranteed, transferring this money into a different type of scheme could very well see you worse off. (Note that if you are looking to transfer out of a final-salary fund with a transfer value over £30,000, you must take financial advice in any case.) Similarly, some old-style individual pension plans offered guarantees such as minimum levels of annuity income that you are unlikely to be able to match in today's marketplace. It's even possible there may be exit penalties to pay.
Equally, look at old pensions in the context of pensions freedom reforms. Plans set up some time ago may make it difficult or even impossible to take advantage of these reforms or limit your ability to manage your money effectively with no online access, for example. Ifyou're not sure how to weigh the pros and cons of consolidating your pensions, take independent advice.