Auto-enrolment (being automatically placed into a workplace pension) and the many job changes people experience—around 11 times over the course of a lifetime, according to some estimates—are resulting in a massive and extremely valuable sea of retirement funds that are no longer related to their original owners.
According to data released by the Pensions Policy Institute, the COVID-19 pandemic is likely to have accelerated job changes, triggering a £7.2 billion increase in the anticipated value of lost pensions.
Additionally, there is some evidence that more people have moved homes since 2018, which is a major factor in why people lose track of their pensions.
Combining your pensions with one provider can be a smart move for a variety of reasons. Most obviously, having a single retirement fund makes tracking and managing it much simpler than having numerous pensions from multiple providers.
If you take action on combining your pensions, you will be able to do this with a Financial planner. This will provide a go-to person who can offer you personalised advice & support, saving you time contacting many different providers for updates and to make any changes you need.
As a Financial adviser can review a variety of options for your pension needs, you may be able to find a pension with reduced overall fees, than what you were paying when you had a few across different providers.
A combined pension can provide greater flexibility with your money. You will have all of your pension savings in one place with one set of conditions that you can follow when deciding about your future. This provides greater control over your retirement planning.
A combined pension may provide additional investment options that you previously couldn't access. These new options may be more suitable for your needs.
Everyone has different circumstances and a different existing pension setup. For this reason, there are a few things you need to consider and be aware of when moving your pensions:
Older pension schemes, for example, often charge more than modern pensions and can be quite restrictive.
It's important to be sure there are no exit fees or key benefits tied to any old pensions that you might lose before moving them.
There may be fees to pay with your provider to move your pensions to them. However, it is more often the case that these fees are waived as they bid for your business.
If you like to manage your own pension, a new provider may have a different fee structure to the one you are used to.
If you do elect to consolidate with one provider, the procedure should be rather straightforward for "defined contribution" pensions, where you accumulate a fund that you can access at age 55.
However, if you have a ‘defined benefit’ (DB) pension valued at £30,000 or more, you will need to take regulated financial advice before transferring (FCA rules) and that can take more time.
If you decide to combine your pensions, a financial adviser will be able to help you with most of the work. You will be asked about your existing pensions, your needs assessed (considering your short-term and retirement goals), and have all of the available pension options explored. And if the best option is for you to remain with your current pension, that will be the recommendation provided.
Once the best pension option for you has been chosen, the necessary paperwork is then submitted, on your behalf, to the relevant pension providers to complete the transfer.
The Pension transfer can take just a few weeks to a couple of months to complete, depending on the complexity. An example of a complex pension transfer would be moving a pension from the UK abroad.
You can transfer your defined contribution pensions at any time before you choose an annuity or take benefits from them. Whether or not you can transfer your pension after you have taken benefits will depend on the pension provider. You will need to look over the existing terms or contact your provider to find out.
To find missing pensions, the first step is to always contact your old employers. If you have no luck with this, you can use the Pension Tracing Service. As part of conducting a pension review, a financial adviser will be able to assist you with this.
Pensions dashboards will start to be implemented starting within the next year, this is going to make finding your pensions much easier as it enables you to view all your pensions online in one location.
However, in the meantime, keep on top of any new pension details by writing them down!
Our website offers information about financial products such as investing, savings, equity release, mortgages, and insurance. None of the information on Sunny Avenue constitutes personal advice. Sunny Avenue does not offer any of these services directly and we only act as a directory service to connect you to the experts. If you require further information to proceed you will need to request advice, for example from the financial advisers listed. If you decide to invest, read the important investment notes provided first, decide how to proceed on your own basis, and remember that investments can go up and down in value, so you could get back less than you put in.
Think carefully before securing debts against your home. A mortgage is a loan secured on your home, which you could lose if you do not keep up your mortgage payments. Check that any mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.