A pension is a peculiar thing to lose.
Most of us regularly misplace our keys, phones and glasses. But, an increasing number of people are losing track of their pensions, according to new research from Aegon.
And unlike those pesky car keys or reading glasses that eventually turn up (typically in the last place you’d ever think to look), these pensions remain unclaimed. According to the Government, the total value of these pensions is estimated to be £400 million (Source: Gov.UK).
With the average worker now holding more jobs across their lifetime, and consequently having more pensions, how can you reduce your chances of losing track of a pension? And more importantly, how can you hunt down one that has already gone missing?
It isn’t surprising that people are losing track of their pensions. The introduction of auto enrolment means that most employees are now automatically signed up to their company pension scheme.
The current eligibility criteria include employees who:
- Are aged 22 and over
- Work in the UK
- Earn above £10,000
The problem is exacerbated by the fact that people change jobs with greater regularity. In fact, the average UK worker will hold 11 jobs in their lifetime (Source: Gov.UK). Providing they fit the auto enrolment criteria, this will mean 11 workplace pensions to keep track of, plus any personal pension schemes.
How do I track down a lost pension?
One way involves a deerstalker cap, a Calabash smoking pipe and an unflappable assistant; preferably called Watson.
This might seem a little complicated for most. Luckily, a simpler way does exist. An online pension tracing service is provided by the Government, which can be accessed here.
The system works by running any details you can get from old paperwork (or even former colleagues if they can remember the employer or scheme name) against a database. It then provides the name and contact details of the pension scheme, allowing you to write to them, giving them your:
- Full name
- Home address
- National Insurance number
- Email address
- Phone Number
The pension provider will then be able to reply with an update of how much your pension pot is worth, if you have one.
How can I avoid losing track of my pensions?
As with most financial matters, prevention is far more effective than a cure. Taking steps to organise your pensions will save you time, money and unnecessary stress. Multiple lost pensions can push your retirement planning off course, as you can never be sure exactly how much you have.
There are a number of ways to keep your pensions where you can see them:
- Keep good records: This can be as simple or complex as you want to make it, from a Manila document folder holding a copy of each pension statement to a spreadsheet regularly updated with balances and account information.
- Consider consolidating pensions: This isn’t always the best thing to do (and a financial adviser will be able to assess your particular situation). However, if it is the right choice for you, consolidating your pensions will bring them together into a single pot. This can make it easier to manage your savings, and reduce the chances of losing track.
- Update your contact details: When you move to a new house, you don’t want to leave your pension behind. Taking time to give pension providers your new contact details will ensure that you don’t miss any future correspondence. People update their contact details for anything from utility bills, to banks and credit cards, so add your pension providers to the list of people to contact.
If in doubt, take advice
This can be the most powerful step you take to avoid losing your pensions. In 2015/16, there were 169,000 tracing requests for lost pensions. This marks a 436% increase since 2007 (Source: Aegon).
Working with a financial adviser will help ensure that your retirement planning stays on track, and prevent you from becoming one of the many hunting down a lost pension.
It doesn’t stop there
Research from Unbiased shows that people who take financial advice, save on average £98 more per month, and have an additional income of £3,654 each year in retirement. And the earlier you take advice, the better. For example, people who first took advice between the ages of 18 and 24 are 32% more likely to be well prepared for retirement than those who first took advice between the ages of 45 and 54.
If you are trying to track down a lost pension or taking general steps to improve your retirement planning, we are here to help.
Call Sarah or Bev on 0115 933 8433 or email firstname.lastname@example.org