Did you know it has previously been estimated that there could be as much as 2.8 million lost or forgotten pensions in the UK worth on average of £9,500 each? It is a truly eye-watering amount of money.
How is it possible to lose or forget about a pension? Well very easy in fact. Many people change their address over the years and it is very easy to overlook updating your contact details with a previous pension scheme and/or employer. What’s more, many pension schemes have either been wound up, taken over by the Pension Protection Fund, taken over by another pension scheme or a previous employer’s business has been taken over by another business. Frequently the name of the new employer and/or pension scheme changes as well as the address and contact details. So, as you can see, it is all too easy for someone to lose or forget about a past pension scheme.
So the question is what can you do about it?
- Double-check your career records
- Search your historic documentation
- Make sure every past pension provider has your up-to-date contact details
- Look for gaps in your employment record
- Contact your past pension provider or administrator
Look out for previous so-called rebate only or contracted-out personal pensions as these are very easily overlooked and forgotten about. They were funded by some of your employer and employee National Insurance contributions instead of the SERPS (State Earnings Related Pension Scheme) element of your state pension scheme.
You could contact your past employer directly or use the government’s pensions tracing service
You could trace a previous employer on the Companies House website. If your past employer’s company’s name has changed you will be able to find their new name
If you previously worked for a charity then try the Charities Register
Do be very aware of pension scammers. Be very vigilant. Consider using the services of the government’s Moneyhelper or Pensionwise services. Take advice from your Independent Financial Adviser if you have one or find one. A good place to start is Vouchedfor or Unbiased. Professional bodies such as The Personal Finance Society (PFS) and The Chartered Institute of Securities and Investments (CISI) have registers of Independent Financial Advisers. Search the Financial Conduct Authority (FCA) register of regulated companies – or the FCA warning list of firms that are not authorised or regulated
Another useful site for checking on scammers is https://www.fca.org.uk/scamsmart
You are often able to trace lost pensions yourself without having to pay to use a specialist firm. Always ensure that firms of this nature are legitimate if you do use one.
Once you have traced a lost pension then congratulations are in order. However, you then need to decide what to do about your windfall. So what should you do next?
- If it is a small pot i.e. less than £30,000 you may decide to simply cash it in but do be aware it will still be subject to tax.
- If it is larger than £30,000 you may decide to leave it where it is, transfer it to an existing pension of yours, transfer it to a new pension scheme or consolidate it with other pensions of yours into a new pension scheme.
- Decide whether you want to do this yourself or take professional advice from a pensions expert.
As ever the choice is yours but whatever you do, make sure you follow the pensions tracing steps outlined above if you think you may have a lost or forgotten pension. You know it makes sense.*
The contents of this blog are for information purposes only and do not constitute individual advice. A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. You should seek advice to understand your options at retirement. This blog is based on my own observations and opinions.
Chartered and Certified Financial Planner
Managing Director of Wealth and Tax Management
If you are looking for expert guidance in Financial Planning contact Wealth and Tax Management on 01908 523740 or email email@example.com