Is it time to get your pensions pots into shape?
Locating a misplaced pension fund can be a challenging task, particularly if you’ve changed jobs frequently. Recent studies by Opinium reveal that 16% of UK adults have made an effort to locate a lost or forgotten pension, with only 9% succeeding in doing so. Given the current financial difficulties faced by many and the cost-of-living crisis, these forgotten pension funds could provide much-needed relief.
The average total of lost pensions found was £6,351
Most respondents found pensions valued between £1,000 and £5,000 (24%), while a significant 8% were able to locate pensions worth over £20,000. Alarmingly, less than one in ten (8%) individuals know they have a missing pension but have yet to try to trace it.
Starting the search sooner rather than later
The issue of lost pensions in the UK has become increasingly challenging in recent years, especially due to the pandemic, which resulted in a significant number of people changing their jobs. According to the Pension Policy Institute, the total value of lost pension funds is estimated to be an astonishing £26.6 billion in 2022. Therefore, it is essential to initiate the search process for lost pensions as early as possible to reap the potential benefits.
The rules around pensions have changed over time. This means that the existence and accrual of your pension may depend on when you were employed, and if a pension exists for you. It’s important to note that the details of your pension scheme may differ from others. Here is a general outline of these regulatory changes:
Before April 1975
Refunds on pension contributions were likely received by you if your employment ended before April 1975. However, some pension schemes did not require employees to make contributions. Therefore, if you did not contribute, it’s unlikely that you would be eligible for any benefits from that scheme.
April 1975 – April 1988
If you left your job between April 1975 and April 1988, and you were over the age of 26 with at least five years of service, it’s possible that a pension may have been maintained for you. However, with a service of less than five years, you may have received a refund of your contributions.
April 1988 onwards
If your employment terminated after April 1988 and you had completed at least two years of service, you may qualify for a pension. If you left with less than two years of service, it’s likely that you may have received a reimbursement of your contributions.
How can you avoid losing track of your pension pots?
A new job potentially signals a new pension scheme. Since the implementation of auto-enrolment in 2012, approximately 10 million people have started saving for their future via employer-sponsored pensions. You will likely be enrolled in numerous workplace pension schemes over your working lifetime, so losing track of your pensions pots is understandable. Matters are complicated further when employers go out of business, names have changed, or people moving house. To avoid losing track of your pensions, we recommend the following:
Keep your contact details up to date
Always disclose changes in your contact details to your pension providers or ex-employers. Without accurate details, it can be extremely difficult for them to contact you.
Understand different pension plans
It can be helpful to understand the distinction between defined benefit plans (also known as final salary schemes) and defined contribution plans (also known as money purchase schemes) when managing and keeping track of your pension plans.
Keep track of your SERPS
The State Earnings-Related Pension Scheme (SERPS) was a government scheme to increase your state pension and eligible to those who started working before 2002. It’s important to monitor your payments to this scheme.
Use Government services
The UK government offers services to locate missing pensions. These services are particularly useful if you’re looking for details of your old employer’s scheme, a personal pension provider, or confirmation of your SERPS situation.
Keep all your payslips
It’s important not to overlook any potential pension assets. Your previous payslips can be a valuable resource in this regard, as they contain vital information, such as your full name, address, date of birth, national insurance number, type of pension, retirement age, employee number, and policy number.
By following these steps, you can help ensure that you don’t lose track of any pension pots and take important steps towards securing your financial future.
How to find a lost pension
Check your old paperwork
Annual statements from pension schemes will include an estimate of the retirement income you would be entitled to from your pension pot. Old paperwork from an employer or pension scheme is a good way of finding a lost pension. You should look for details, such as the name of your employer or pension scheme, or the contact details of the scheme’s administrator.
Contact relevant parties
If you’re no longer receiving annual statements, you should consider contacting:
- The pension provider
- Your former employer (if it was a workplace pension)
- The Pension Tracing Service
Contact the pension provider directly
If you know which provider your pension was with, contact them directly. However, when you contact them, provide as many of the following details as possible:
- Your plan number
- Your date of birth
- Your National Insurance number
- The date your pension was set up
The following questions should be considered when contacting your pension provider to ensure you get an overview of your pensions pot:
- What is the current value of the pension pot?
- Has a beneficiary been selected for potential death benefits?
- What is the total amount contributed to the pension fund?
- What fees are associated with managing the pension fund?
- What is the potential income from the pension fund at your preferred retirement date?
- How is the pension fund currently invested, and what are the options available to make changes?
- Will you be charged if you wish to transfer the pension pot to a different provider?
- Are there any special features, like a guaranteed annuity rate or a guaranteed minimum pension?
- What are the death benefits, i.e., how much would be paid from the pension fund in the event of your death?
Contact your former employer
To locate a pension scheme from a previous employer, it is recommended to contact the employer first. In the case of a personal or stakeholder scheme, it is advisable to reach out to the pension provider directly if their contact information is available. If you are uncertain about the pension provider’s details, do not hesitate to ask your former employer as they should be able to provide you with this information. To proceed with the search, you will need to provide the following details:
- Your National Insurance number
- The date you stopped working with them
- The date you began working for that employer
- The dates you entered and exited the pension scheme
Additionally, ensure you ask the following key questions:
- What kind of pension plan is it? For example, is it a defined benefit or defined contribution plan?
- If it’s not a defined benefit scheme, which pension provider are your funds with?
The Government’s Pension Tracing Service
The government’s Pension Tracing Service is a valuable resource if you’re having difficulty tracking your pension details. This free service is useful, especially if you’re having trouble finding the contact information of a former employer or you are unsure about a pension provider.
You can contact the Pension Tracing Service by phone at 0800 731 0193. Alternatively, you can use their online directory to search for contact details.
NEED HELP AND GUIDANCE TO REVIEW YOUR PENSIONS?
If you have various pension pots that have not been reviewed in a while, please contact Menzies Wealth Management.
We will be able to advise you on the suitability of your various pension ‘pots’ taking into account your retirement objectives and attitude to risk.
Source data:  Research conducted by Opinium among 2,001 UK adults between 25–28 October 2022.  https://www.pensionspolicyinstitute.org.uk/ sponsor-research/research-reports/2022/2022-10- 27-briefng-note-134-lost-pensions-2022-what-sthe-scale-and-impact/
Disclaimer: The information provided is for general information only and is not intended to address the particular requirements of an individual or business. It does not constitute any form of advice or recommendation by Menzies Wealth Management Ltd and should not be relied upon by individuals in either making or refraining from making any financial decisions. Where necessary, you should seek appropriate professional advice before acting on any of the information provided.
Menzies Wealth Management is authorised and regulated by the Financial Conduct Authority (486548). Registered address: 1st Floor, Midas House, 62 Goldsworth Road, Woking, GU21 6LQ Registered in England and Wales 06597008.