Are you guilty of putting your annual pension statements in a box and letting them pile up? Are you one of the thousands of people unaware of other workplace pension pots you may have accumulated, or simply lost track of?
With more than 10 million workers auto-enrolled into workplace pensions, the issue of changing jobs and losing track or leaving behind pension schemes is growing at an alarming rate.
Gone are the days of a job is for life. Better salaries, working conditions, even closer commutes to work all add to a change in employers and work direction. Our lives have changed so much that research suggests the average worker changes jobs 11 times during their life.
Moving from employer to employer, you may be building up new pension funds, but are you leaving those funds behind when you make your career switch?
The fear is that soon the UK will be awash with millions of “stranded pensions” where people are unaware or have lost track of what they have built up and where. For many people panic sets in when they realise the situation far too close to retirement.
The Association of British Insurers (ABI) estimates that more than 1.6 million pension pots worth £19.4 billion are “lost”, that’s the equivalent of £13,000 per plan. With more than 10 million people enrolled in the workplace pension, the problem is only expected to grow.
It’s thought that a quarter of workers aged between 25 and 40 already have two pension pots with previous employers. Couple this with the, at times, lack of transparency in regards to pension statements and the general confusion, it looks more and more likely we could be heading towards a generation of customers unable to connect with their stranded pensions.
What can you do
Pension providers are obligated to send you an annual statement, so make sure you go through them to check their worth. Putting them in your filing cabinet without proper analysis won’t help your retirement.
One of the biggest reasons for a lost pension is outdated address information. Always keep your personal details up to date, and if you have moved home, write to your provider with your updated details.
Simply knowing where your pensions are may not be enough. You can consolidate all your workplace pensions into one scheme to better manage your pension. It’s easier for defined contribution schemes, but switching older schemes can be trickier, especially those from 20 years ago or longer.
However, as so much has changed regarding pensions and with so many more options now available, many older schemes have become expensive and inflexible. It might be the right time to move on and consolidate, lowering charges and avoiding dealing with multiple providers.
Identifying and bringing all your pensions together can often be a laborious and complicated task. What is right for you depends on a number of factors. Talking to one of our experienced independent financial advisors for a free pension health check is the first step you should take. Now is the time to act and get your free pension health check, because it really is a case of sooner rather than later and with Brexit on the horizon, there’s no better time.
We will be able to help you identify any extra pension pots you may have, how to consolidate and most important – get your pension tuned up and ready for retirement.