Pension tracing basics

Over the period of your working life, you might have lost track of the private or workplace pension schemes you have contributed to, especially if you have moved house. Since the introduction of pension auto-enrolment in October 2012, employees who meet certain requirements will have also been made a member of a workplace pension scheme without needing to ask to be a part of it.

If you have lost track, you certainly won’t be alone. According to figures from the Association of British Insurers, there are an estimated 1.6 million ‘lost’ pensions with a value of more than £19bn. Typically many of these will be smaller pension pots of a few hundred or thousand pounds, but they can add up and it is money you are entitled to.

If you are older, due to the way pension rules have worked in previous years, your pension might not actually be lost, but you might not have built up a pension entitlement if you left a job before a certain age or without completing a certain number of pensionable years’ service.

If you are still in receipt of an annual benefit statement or have any old paperwork from previous schemes, this will give you an indication of how much pension you may receive when you retire. It isn’t uncommon for people to have several smaller pots. If you know the name of the provider of a previous pension, you can contact them directly and they should be able to trace a record of your pension plan.

You can also try contacting previous employers, although this is sometimes difficult if a business has been sold or ceased trading. Former work colleagues might also be a way to help and keeping in contact with them is now easier thanks to platforms such as LinkedIn.

The Government also has a Pension Tracing Service website which allows for free searches of its database of around 200,000 pension schemes. This will tell you how to contact the employer or who the pension provider is who is looking after the scheme.

Once you manage to track down any pensions, you should look at the benefits of the scheme as some of the older schemes have a number of significant benefits which might not be on offer today. This could include with-profit bonuses, fixed retirement age, death in service or an extra tax free allowance. If you transfer out of the scheme you will lose them, so it is important to take independent advice before you make any decisions.

If you do decide to combine all of your pensions into one place this may be easier to manage, could reduce fees and allow you to concentrate on your future financial goals, enabling you to build up a pension pot to see you through retirement.

It is also important to consider thoroughly the pros and cons of when you take money from your pension. Since 2015 you have been able to access your pension more flexibly when you reach the age of 55. From 2028, this will rise to age 57.

It’s hard to think about what you might need in the future when the cost of living is rising now, but it is important to contribute to a pension because it also offers tax relief whether you are a basic or higher rate tax payer.

There is clearly a lot to think about where pensions are concerned and if you are in your 20’s or 30’s, your retirement will seem a long way off, however time flies when you are busy, so make time to build a secure future for yourself and your loved ones. The longer your money has to grow, the more financial flexibility you should have in the future.

If you would like any advice about your finances and financial planning for your older age, please get in touch today.