Pension tracing: how much could you add to your pension pot?
A pension is one of the most important investments you can make throughout your life since it is likely to be your main source of income during retirement. To make sure you can live comfortably in your post-work years, you will want to save as much as possible into your pension fund.
Thing is, keeping track of these investments over time can be difficult, particularly older funds that you may no longer be paying into. That’s why National Pension Tracing Day was founded: to encourage and remind you to spend some time tracking down any “lost” pensions.
This year it takes place on Sunday 30 October. So, why might you need to trace old pensions, and how much money could it realistically add to your pension fund?
1 in 30 people have a pension that they have forgotten about
Since workplace pension auto-enrolment became mandatory in 2012, you will usually start contributing to a pension every time you start working with a new company.
Over time, it’s easy to lose track of the documentation for each one – especially if you didn’t pay into the scheme for a long time. Add to this any house moves that you forget to tell your pension providers about, and this can add up to a lot of different pension pots sitting with various providers that have no way of getting back to you without a bit of help.
It’s estimated that 1 in 30 people could have a pension that they have forgotten about, so National Pension Tracing Day is the perfect time to see whether you are one of them and if you can benefit from tracking down those lost investments.
The average lost pension could be worth £13,000
You might wonder whether it’s actually worth tracking down lost pensions. After all, if you weren’t working at a particular company for very long, how much could realistically be sitting in that pot?
The truth is that it could be very worthwhile finding that pension. According to the Financial Times, the average lost pension in the UK could be worth £13,000. When you factor in the power of compounding, even a very small pension could grow to add a significant boost to your retirement savings over the coming years and decades.
Get your pensions organised for maximum returns
Tracking down your old pensions isn’t just about getting your paperwork in order and finding out how much you have saved (although that is one of the reasons it’s important).
As well as providing a boost to your pension savings, reacquainting yourself with each of your pensions can also help you to make sure you aren’t:
Paying excessive charges on your savings
Investing in an inappropriate fund
Taking too much (or too little) risk with your savings.
Depending on your circumstances, consolidating some or all of your pensions into one plan could help you reduce charges and save time on admin. We can help you to decide if this is the best option for you.
Get started with just a pen and paper
Tracing your pensions starts with you making a list of all the employers you’ve worked for during your career so far.
When you’ve done this, have a look through your records and emails for historical pension statements. Do you have one for each employer? And have you ever paid into a personal pension?
If there are any gaps in your pension history that you aren’t able to track down yourself, you could try reaching out to the employer. They should be able to give you the details of the provider they used when you worked for them.
The government’s Pension Tracing Service is a very helpful tool for discovering the contact details for any lost pensions. While it won’t be able to tell you if you have a pension or its value, it can give you the details of your workplace or personal pension provider so that you can contact them to learn more. It’s also free to use.
Once you’ve got in touch with each of your providers, make sure your contact details are up to date. Do you have an online login that you can access to check the balance and other details? Are they able to contact you with updates when needed?
Finally, if you feel that you could benefit from a little bit of help understanding what to do with any pensions you discover through this process, reach out to your financial planner. They will be able to help you figure out what the best course of action is and how your pension(s) can help you realise your retirement goals.
Get in touch
If you’d like support with tracing your old pensions and understanding how to make sure you maximise your savings, we’re here to help. Email theteam@fortitudefp.co.uk or call us on 01327 354321.
Please note
A pension is a long-term investment. The fund value may fluctuate and can go down, 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 in the future.