February 24, 2023
This might sound like an odd question. Of course you do, right? (We’re assuming that you’re not rushing off to lift the floorboards or check under the mattress at this point.)
If you have ever moved jobs, or moved house, could some of your money be included in the estimated £26.6 billion of lost pensions pots in 2022?[1]
The lost pensions challenge in the UK has grown significantly in recent years, and the Covid-19 pandemic, which caused a large number of people to move jobs, has added to the problem.
If, like many people, you’ve worked for several employers during the course of your career, you may have gathered a collection of pension plans. If you have been self-employed or worked as a contractor at any point, you might have set up a personal plan or two. These days, the average number of jobs that employees have over the course of a lifetime is 11.
With employers being obliged to offer pension plans, there’s a good chance of people signing up to a plan and then forgetting about it when they move jobs again shortly afterwards.
The number of workers with small pension pots of under £1,000 has also increased dramatically in recent years. The Pensions Policy Institute (PPI) has predicted that the problem is only going to get worse, with the number of small pots set to triple to 27 million by 2035.
Recent research estimates that 46% of pension holders have lost track of at least some of their pension pots [2]. That’s millions of people across the UK who could be missing out on their own money because it is still sitting within the pension pots of previous employers.
Besides the obvious – not benefitting from money that is due to you when you become eligible to claim your pension – there are costs involved.
Owning multiple pensions, even if you know where they all are, could mean that you are paying over the odds in administrative fees, or losing money due to poor investment performance. With inflation currently high, you want to be making the most of your money, in order to keep your retirement plans on track.
And when you do retire, having multiple pensions with different employers or pension providers could make managing your money more complicated just at a time when you might want things to be simpler, allowing you to relax and enjoy your well-earned leisure.
Keeping on top of your pension pots will put you in a much better position to make informed retirement decisions now, or when you get older.
The research also highlighted that 13% of people did not know how to track down a pension pot from previous jobs.
The PPI research on lost pension pots indicated that the speed at which pension pots were being classified as lost was increasing, with an extra 1.2 million pots having been ‘lost’ between 2018 and 2022. That’s a 75% Increase in lost pots in just four years.
Consolidation your pension into a single pot is one possibility and might well give you a clearer picture of your retirement funds and put you in greater control. It could also reduce the amount you are paying in charges.
It is worth noting, though, that it will not necessarily be your only, or your best option.
That is where we can help.
At Talis IFA we will review your current retirement plans and help you track down lost pension pots if you are unsure about what investments you might have. Once we have a clear picture, we will go through your options and make recommendations as to how best to make your money work for you.
If leaving it where it is looks like the best option, we’ll say so. We take a ‘life first, money second’ approach, so our recommendations are based on developing a deep understanding of your current situation and future plans – whether that’s saving for the future, or freeing up money now. We’ll show you how your different pension pots are performing and give you a clear picture of what you’re paying for them, to put you back in control of your pension and support you to make informed decisions.
To find out more, please get in touch.
Source data:
[1] Source: https://www.pensionspolicyinstitute.org.uk/sponsor-research/researchreports/2022/2022-10-27-briefing-note-134-lostpensions-2022-what-s-the-scale-and-impact/
[2] https://adviser.scottishwidows.co.uk/assets/literature/docs/2022-10-pension-pots.pdf
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