It seems UK savers have misplaced 1.6 million pension pots. That’s a lot of pension savings which could make a huge difference for many people, so if you think your employees might be some of them, there is good news– all is not lost.
Those lost pots are worth around £20bn according to the Pensions Policy Institute. While that’s an eye-watering amount, it’s easy to see how so many have gone astray.
The average worker now changes employers every five years. For some, it could be more often, and each change could mean a new workplace pension.
Once they’ve had a few jobs and built up a few pension pots – and perhaps an older personal pension – they can be easy to lose sight of.
But it’s their money for their future so they’ll want to know where it is, how it’s growing and what they can do about it if it isn’t.
And if they’re in the run up to taking their pension savings… well, they’ll want to make the most of them.
Here’s some suggestions on next steps.
Regular Pension Checks
All pension providers should send your employees a statement each year, telling them how their pension is performing and keeping them up-to-date with everything they need to know.
But something as simple as a change of address could mean they lose touch with each other unless they update their provider, as they should with their bank or Mobile Phone Company.
The average worth of the 1.6m unclaimed pensions is £13,000, so they may have a forgotten pot with thousands in it – enough to potentially make a big difference to their retirement fund.
How to find a misplaced pension
Your employees should make every effort to contact their pension provider or their former employer to get the ball rolling. If they don’t have the details of either of these, they can use the Pension Tracing Service.
All they need is the name of their employer or pension provider to get started, it’s as simple as that.
What’s the next step?
Once they’ve found their pension pot, what’s next?
They could file that information away along with pension paperwork from their other providers, but there is an option which might make it easier for them to stay in control of their savings.
It could make sense to bring everything together
It’s worth them thinking about combining all of those pots into one pension.
It’ll be easier for them to see how their funds are doing so that they know how much they’re paying in overall, and if they need to consider increasing their pension payments.
They’ll have everything in one place, which makes it simple for them to check that their pension savings are in the right kind of investments, and to change them if they’re not.
If they are thinking of bringing all of their pensions together, they will need to check they’re not giving up any valuable benefits or guarantees if they transfer, as they may want to keep these – that’s really important.
There’s no guarantee that they would get more as a result of transferring their pension savings. They may decide to speak to an expert to get information on their situation. Transferring isn’t for everyone, and they need to consider all of the facts to decide if it is right choice.
You can read more about bringing pensions together in our Bring your pensions together: we suggest nine things to think about article. Further details can be found on our ‘transfer my pension’ page.
A final thought. The Government predicts that there could be as many as 50 million dormant or lost pensions by 2050. Encouraging your employees to take some simple steps now could ensure they’re not one of them.
The information here is based on our understanding in November 2018 and shouldn’t be taken as financial advice. A pension is an investment, the value can go down as well as up and you could get back less than you paid in.