If you believe you have old pensions but don’t know where they are or what they are worth then it could be difficult for you to retire.
If you don’t know what you have, how will you know if you could retire or not?
Don’t bury your head in the sand.
Dealing with your finances might cause you stress because you don’t understand it.
So here is a simple process to follow to get organised and get your retirement plan on track.
The problem with not sorting out your old pensions
According to the Association of British Insurers there is around £19.4 billion in unclaimed pension pots. One of the main reasons for this is that only 1 in 25 people inform their pension provider when they move house.
The government predicts there could be 50 million dormant or lost pension accounts by 2050.
So the longer you leave it the higher the chance you may just eventually lose any old pensions you are entitled to.
If you have old pensions that you have not looked at for many years you may find they are providing poor investment returns. Worse still, they might not be invested at all and could be sitting in a pension cash account earning nothing.
If your retirement money sits in an old fashioned pension with high charges you might even find your fund is reducing each year.
The pension balanced managed fund sector (mixed investment 40-85% Shares) has seen annualised returns of 6.70% over the last 10 years. You want to ensure you are getting a piece of this.
The biggest problem with not sorting out your old pensions is that you can’t plan. You don’t know when you can retire so you are working without an end goal.
In order to retire you need to be confident you will have enough money to spend in retirement to cover the lifestyle you want. If you’re not on top of all your pensions, how will you know this?
You may even find that you have more in pensions than you realised and could retire earlier than you thought. You could be working when you don’t need to!
Finally, think about what would happen if you suddenly died? If you don’t know what old pensions you have and where to find them, how are your loved ones ever going to know to claim and inherit them?
This means hard earned retirement savings could be lost forever.
The process for sorting out your old pensions
Here is essentially a 5 step process to get from pension disorganised to pension organised.
#1 – Make a list of all your old employers
You will need to include information like:
- Name of the business.
- Address (if known).
- Dates you worked there.
#2 – Search the Pension Tracing Service
If you do not have recent statements (as in the last year) from your old pensions and you are not sure how to contact the pension provider you can use the government’s Pension Tracing Service to find them.
The Pension Tracing Service is free to use and will ask you to input details of your old employer. It will then hopefully confirm who the current pension provider is and how to contact them.
Don’t worry if you think your old employer has closed down or merged with a new company as the Pension Tracing Service should still be able to provide you with details based on the old company.
Even if a company closes down the pension scheme should not and it should still be administered by someone.
#3 – Contact each pension company
Once you have the list of all your old employments you can contact the old pension provider and request confirmation that you have a pension with them and if so a copy of the latest pension statement.
The pension statement should tell you what type of pension it is, how much is in the pot and where it is invested.
#4 – Consider consolidating old pensions
If you have a number of old pensions you might want to consider lumping them altogether in a single pension pot. You could transfer them into your current workplace pension scheme or your own personal pension you set up yourself.
If you don’t really understand pensions then it’s at this point you might want to seek the help of a Financial Adviser. They will be able to check your old pensions to find out if there are any of the following:
- Transfer penalties.
- Guarantees that might be lost on transfer.
There are many benefits to consolidating your pensions and if you do ultimately decide to do this then you should find your current pension provider has a section of their website that details their ‘transfer in’ process.
Once you have completed the relevant forms with them the new pension provider will contact the old pension provider to request the transfer. Your Financial Adviser could of course arrange this for you.
#5 – Don’t forget your State Pension
A key part of your retirement planning could be your State Pension provided by the government which everyone is entitled to providing they have paid enough National Insurance contributions over their working life.
You can find out your latest position for free by using the government’s State Pension Forecast tool.
After going through the above steps you will be clear on what you have and whether it’s enough to retire. If it isn’t at least you can make a plan whilst you still have time to achieve what you need to so you can eventually retire.
You will also have peace of mind that your loved ones will get everything they are entitled to should something happen to you.
If you would like a retirement plan including an analysis of all of your old pensions then please schedule a no obligation free 15-minute call.
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.