Could you possibly have a lost pension lurking somewhere in the financial wilderness?
Research from the Pensions Policy Institute has estimated that there could be as many as 1.6 million lost pension pots, with a potential combined value of £19.4 billion.
This could mean some serious cash just sitting unclaimed. Some lost pension pots could be worth a significant amount of money and make a big difference to your retirement or your legacy for your family.
Why there are so many lost pension pots
Back when I had my first job, being a part time green top and green trouser customer service assistant at DIY chain Homebase, I didn’t have a clue what a pension was. At the time, being 16, I couldn’t have even told you if I joined the company pension scheme or not. It was only some years later when I started to work in finance that I discovered just how valuable pension saving is.
So when I went back and checked if I had indeed paid into a pension whilst working for Homebase I was really disappointed to find out I hadn’t. All those years of compounding investment returns I missed out on!
But for those not now working in finance it could be the other way round. My fellow green trousered colleagues could well have joined the pension scheme in their youth, but today still have little knowledge of what a pension is and therefore never bother to check what they signed up for back in the day.
The most common reasons for a lost pension are as follows:
- Not knowing you signed up to a pension. Particularly in your younger days, it may be that you did join the pension scheme but there was little information provided at the time, and you got so used to the pension saving coming out of your salary that you never noticed it.
- Keeping up with the administration. Over time, the more jobs you have, the easier it becomes to loose track of the pensions you had with previous employers.
- Changing address. The Association of British Insurers have found that only 1 in 25 people remember to tell their pension providers that they have moved home. This means your old pension providers can’t make contact with you and send you updates.
- Pension provider changing names. Over the years many pension providers and employers’ re-brand, get taken over and it can be difficult to remember the original names therefore locate who you should be dealing with.
- Company changes pension schemes. Not only do providers and companies change names but companies also tend to change their pension deals over time, usually to save cash. So you may find you actually had more than one pension with an old employer.
The problem with lost pension pots is only likely to get worst. Research from LV= has found that the average worker now changes jobs every five years.
It is now law that every company must offer and enrol you into a pension scheme (subject to qualifying criteria).
Going forward, millennials are likely to have at least 12 jobs during their lifetime. That’s potentially a lot of lost pension pots over time.
How to search for a lost pension
So it’s really important to find those lost pension pots.
Even if you feel you have located all of your old pensions it’s best to do a double check. If you are not sure whether you have any lost pension pots or not, you should definitely check!
Here are some ways you can investigate:
1. Go through your employment history. If you can’t remember if you had a pension or not, contact the employer’s HR department to check. Don’t forget to look for a change of pension scheme. Did you end up having two or three different pensions with the same employer? This is more likely if you were with the company for longer.
2. Go through your files. Remember it’s not only company pension schemes that get lost. People also loose personal private pensions they set up. So check your files, bank statements and see if you can find a record of any payments made to pensions you are not aware of.
3. Pension Tracing Service. If you have found details of a pension scheme but the company or provider no longer exist, then try using the government’s Pension Tracing Service. It’s online and free to use. You just type in the name of the company name you have and if it can find them it will display details of who looks after the pension now and who you need to contact.
4. Google. If all else fails, turn detective and just search and search. Google tends to now have a huge historical record of articles relating to all sorts of pension movements and mergers. Just follow the trail. What you are looking for is contact details so you can get someone to look up your pension record with the old company.
If you do eventually locate a lost pension you may find the provider is not able to discuss it with you as they may hold your old address and therefore can’t verify your identify. In this instance I would advise writing to them confirming your old and new address along with your National Insurance number. If you can, it would be a good idea to enclose something that proves your old and new address like old bills/statements.
The government have announced plans for a new Pensions Dashboard that is supposed to bring together all of your pensions into one online account, so you can see them side by side. This system is being worked on but with the huge scale of lost pensions I don’t believe it will ever truly be able to match them all up to the right person. I wouldn’t wait and rely on it. Do your own digging.
If you do find you have multiple pensions the question then becomes what to do with them all. It may be that it is right to consolidate them all into one making it easier to manage. Or it might be the case that an older pension has significant guaranteed benefits that are not available with today’s modern style pensions.
If you are unsure it is best to get your pensions reviewed by an expert.
If you would like to understand your current pension and retirement position please secure a free 15-minute video call with us. You can speak to a Chartered Financial Planner who will listen to your situation, give you an outline of what you need to consider and guide you in the right direction. We have located many lost pension pots for our clients and helped hundreds to retire.
Question: How many different pension pots have you had over the years? Please share your answer on LinkedIn.
Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.