Have you lost track of your pension?
26 September 2012
Financial journalist for Standard Life
Saving as much as possible into your pension can help you secure a comfortable retirement. But, according to government research, a staggering one in six(1) of us have no idea where we've put this money. We set off in search of lost pensions.
It's easy to lose a pension
This forgetfulness translates into some pretty hefty figures. Estimates suggest that we've lost track of pensions worth as much as £3 billion, with the government predicting that as many as 50 million pension pots(2) could sit dormant by 2050.
Although it sounds strange, it's relatively easy to lose a pension. It may be that a former employer changes its scheme; a pension provider merges with another; or you move house and forget to let your pension provider know your new address.
On top of this, if you contracted out of the state second pension or the state earnings related pension scheme (SERPS), as this pension is built up of your national insurance contributions, it's easy to forget all about it.
Losing control of your pension means you’ll lose out financially
But losing touch with your pension isn't good news for your retirement. As the pension trustees won't be able to contact you, you'll lose out on income when you retire. In addition, even if you are reunited with your scheme once your pension is being paid, you will have forfeited any choices over when and how you take benefits. This could leave you out of pocket.
You could benefit from consolidating several pension pots
You may also want to consolidate some, or all, of your pensions. Having a larger pension can give you access to lower charges as well as making it easier to manage. All your pension investments will be in one place, making it easy to manage your portfolio and administration and keep your details up-to-date with your pension provider.
Not all pensions are suitable for consolidation. Some have enhanced benefits, such as a guaranteed annuity, or there might be a sizeable penalty if you switch it to another provider. There may be charges for moving a pension and there is no guarantee that your investment will be worth more if you move it. If in any doubt, it's sensible to take financial advice to weigh up the pros and cons of pooling all your pension pots.
Given the benefits of keeping control of all your pension savings, the government is keen to make it harder to lose them in the first place. It is consulting on a 'pot follows member' model, backed by the Department for Work and Pensions (DWP)(3), where any pension savings follow you from job to job. But although this would mean benefits for pension savers and providers alike, it's unlikely to happen for some time.
Finding a lost pension is easy
Thankfully it's easy to find a forgotten pension. The Pension Tracing Service, part of The Pension Service, has details of more than 200,000 personal and company pension schemes and it will search through these free of charge on your behalf.
To start tracking down any lost schemes, you can contact The Pension Tracing Service by phone, post or by completing an online pension tracing form. Contact The Pension Tracing Service.
For the best chance of being reunited with a lost scheme, provide as much information as possible. This can include the type of scheme; the name of the employer, and any new name it may have, and the nature of its business; the name of the pension company; and when you belonged to the scheme.
Once it locates your long lost pension, it will provide you with the latest contact details to help you track it down and take full control of your retirement savings.
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Do you think you have dormant pension pots sitting somewhere?
or write to:
The Pension Tracing Service
Newcastle upon Tyne
1. Department for Work and Pensions Research Report No 697 (Shury J and Koerbitz C, 2010, The Pension Tracing Service: A quantitative research study to establish who is using the service, and their outcomes)
2. Department for Work and Pensions
3. Department for Work and Pensions
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