How to track down lost pensions and guidance on pension consolidation.

23rd October 2023

• 8m lost pension pots in the UK, worth around £26.6 billion
• WEALTH at work explains how to track down lost pensions and guidance on whether to consolidate

The total value of lost pension pots has grown from £19.4 billion in 2018 to £26.6 billion in 2022. There are 2.8 million lost pension pots sitting unclaimed because they’ve been simply lost or forgotten about. One of the main reasons for this is because a person will have on average 12 jobs in their lifetime, so could easily end up with many different pension pots with several providers which can easily be forgotten about.

How to track down lost pension

1. List of all previous jobs – Make a list of all the places you have worked. It might be useful to go back through old paperwork such as payslips, P45s, P60s, CVs and job applications.

2. Online research – If you don’t have the pension information for an old employer, you can try to find them using the Government’s Pension Tracing Service.

3. Previous Employers – Get in touch with your previous employer to find out if they have any details. If they don’t exist anymore and if you worked for a company contact Companies House or if you worked for a charity contact the charity register.

4. Up to date statements – Once you have tracked them down, ask for an up to date statement, so you know how much your pension is worth, and have the correct paperwork.

Should you consolidate?

Once you’ve located any lost pensions, if you have a number of schemes and struggle to keep track of them all, it might make sense to consolidate them. This means combining all (or most) of your pension pots into one. This really only applies to define contribution pension schemes where you have a ‘pot of money’ to use for your retirement. Whilst you could also consider Define Benefit schemes (also known as final salary), as these are not reliant on a ‘pot of money’ and guarantee to pay a certain amount of income in retirement, they should probably remain separate. In any event, if you are considering this option, you would be required to seek regulated financial advice at your own cost if the transfer value is greater than £30,000.

Jonathan Watts-Lay explains, “Bringing all your pensions together into one pot isn’t just about making it easier for you to manage your finances. Your different pensions could be invested in very different ways, which may mean you are taking more or less risk with the investments than you are aware of. “

He continues, “Consolidating your pensions means that you don’t have to check the performance of multiple accounts, it could save money on the fees charged, and also ensures that you have a joined-up investment strategy which matches the amount of risk you are prepared to take.”

What risks are there when consolidating you pension?

Jonathan Watts-Lay comments, “It is important to check that you won’t lose out on valuable benefits or be charged expensive exit fees if you leave a provider. For example, some might have guaranteed annuity rates, a protected pension age, or enhanced tax-free cash,. “

He continues, “You also need to ensure that the choice of investment options available are right for you, and that you consider how you to want to access your pension in the future, and whether the provider you want to use gives you the pension income flexibility you are looking for.”

How do I consolidate and how much does it cost?

Jonathan Watts-Lay explains, “To consolidate your pensions, you should get in touch with the pension provider you intend to transfer into. This could be your current workplace pension scheme or another pension arrangement you have set up privately. They will ask for details including the policy numbers and provider names of all the pensions you want to consolidate. This information will be available on your paperwork and statements. The pension scheme you have chosen to transfer into will then begin the process of arranging for all your pensions to be transferred into one plan.”

He continues, “The costs of this can vary but bringing all your pensions together may reduce some charges as some providers charge a lower percentage the more that is invested. Ensure you check all charges with the provider you intend to transfer to, including charges for advice, setting up the new scheme, platform charges, dealing and transactional charges (including those to access funds via drawdown) and investment management charges.”

Some pension consolidations are taking a long time to happen. What is causing the delay?

Jonathan Watts-Lay explains, “The time it takes to transfer a pension depends on the method different providers use. Some still send paperwork through the post, which can be a lot slower than secure electronic methods. Also in November 2021, new measures were put into place to protect pension savers from scams which means that providers are now able to flag or block transfers which show signs of a potential scam. To prevent the transfer being flagged, it is important to ensure that you provide as much information as possible to reassure the provider you are leaving that it is a legitimate transfer.”