You might think it is difficult to lose track of something as important as your pension, but because of the way the system currently works, it's easier than you imagine.
There is an estimated £26.6bn in unclaimed pensions across 2.8 million pots; that's a lot of forgotten pension money!
But there are ways for you to track and find your pension, it is not lost forever. And it is important that you find your pensions as soon as possible too.
- You take back control of your finances and savings
- You have peace of mind knowing exactly where your hard-earned money lies, and the pots' value
- when you know all about your pensions, you have the chance to consolidate them and have them in one place
- which, in turn, will start the compounding interest process.
Here's how easy it is to lose track of a pension
At the moment, every time you change jobs you will be offered a new workplace pension by your employer. It is not possible for your pension pot to automatically be transferred to your new job and you don't really have one universal workplace pension pot the moment you start working but rather an individual workplace pension with each employer.
Moving house and changing address is another reason you can lose track of your pensions. The average person changes addresses approximately eight times in their lives and while updating their bank and utility providers is obvious, informing their pension provider is forgotten.
Why it matters
Your pension is your money, it is your hard-earned money saved for a comfortable retirement. It matters that you are aware of the whereabouts of your pensions and their value.
State Pension in the UK is not substantial or adequate to ensure a good standard of living, but it covers the basic necessities. An extra pension pot - whether arranged by your employer or yourself - should not leave you in a terrible position once you decide to retire.
It is important that you track your pension pots to enjoy the retirement you deserve.
How to find old and lost pensions
There are several ways you could achieve that - some a bit more difficult than other methods. Let's have a look.
Start from home
Before panicking and thinking that your savings are lost forever, take a deep breath.
Who were your past employers? You need to contact them and find out who your pension provider is.
Who is your pension provider? You need to ask for a pension statement from them.
If you're looking for a personal pension pot, have a look at your bank statements and see where you're saving your retirement money.
What information do I need to trace my pensions?
Having as much information to provide your pension provider is crucial but having just these four would suffice:
- your employment history
- date of birth
- National Insurance number
- and the date your pension was set up
One by one, you will find all of your pension pots. It's not the easiest of methods as it takes time, but you can achieve your pension goal.
Get help from the Government
Use the Government's pension tracing service. This is a free service but it is very limited and makes the tracing process difficult. You can only trace the contact details of your pension providers and you're still required to contact them yourself to find more information about your pensions. You don't find out the value of your pot either.
The Government's pension tracing service does not always display the correct pension provider.
Look in the Unclaimed Assets Register (UAR)
Savings and assets that are left for too long unclaimed become 'dormant assets'. You can claim back your forgotten pension by contacting the UAR.
Hope is not lost, neither is your pension.
What should I do next? You may want to consider combining your pots.
Okay, now you've found your lost pension pots and you're wondering 'now what?'.
The easiest thing you can do for yourself and your peace of mind is to combine all these pots into one. Some call this consolidation, others transfer, but all these have the same goal: your multiple saving pots are not scattered any longer, but in one place.
The sooner you do this the better. Compounding interest on a big sum of savings early on can generate an even larger pot. This is because the interest you generate initially on your pension savings is reinvested, and this compounding grows the pot - although investments can go down as well as up.
Transferring your pensions could be a logical solution to never losing track of your pensions again.
It is always good to speak to a financial adviser if you are in doubt regarding your options. If you do choose to combine your pensions it is important to note that as with any financial asset your capital is at risk and the value of your pension can go up as well as down. Tax treatment depends on your individual circumstances and may be subject to change in the future.