Helen Morrissey, head of retirement analysis, Hargreaves Lansdown: “If you’ve worked for a few different companies during your career then the chances are you have lost track of a pension. You’ve paid into it for a while but then moved jobs and as time has gone on you haven’t kept your contact details up to date. Before you know it, you’ve stopped getting statements without even realising. It’s easily done, but it can have a major impact on your retirement planning.
Even the smallest of pensions can grow over time and that pension you paid into a decade or more ago could well have grown a decent amount. As an example, a £10,000 pension pot would be worth more than £16,400 after ten years if it grew at 5% per year. This could play an important role in your retirement income. With 21% of people admitting to having lost track of a pension and a further 18% being unsure if they have, it’s a major issue.
The good news is that you can do something about it. If you think you’ve lost track of a pension, then contact the government’s Pension Tracing Helpline. All you need is either the name of the employer or the pension provider and the helpline will be able to give you contact details, so you can get in touch and see if you do have a pension with them. Once you have a better idea of the total held in your pension, you can make a plan to hit your goals.
Once you’ve tracked down all your pensions, you may decide that you want to consolidate them. This can cut down on time, admin and fees – it can also help you make better retirement decisions. For instance, if you have three small pension pots you may be tempted to take them as cash and spend them. However, if they are consolidated into one pot then you are less likely to do this.
There are things you need to consider before you consolidate. First of all, it rarely makes sense to transfer a defined benefit pension due to valuable guarantees in place. You may also find that that you potentially incur expensive exit fees by consolidating. Other older pension plans also contain valuable benefits such as guaranteed annuity rates that you would lose by consolidating - it’s always a good idea to check for these things before taking the decision to consolidate.”
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