Have you lost track of your pension?
The idea of a job for a life, where you left education and had a structured career with a single employer, is well and truly a thing of the past. Changes in the employment market mean that these days people typically work for several employers during their working lives. And the chances are that if you have changed jobs a few times, you will have collected a number of different workplace pensions on the way.
Scattered pension pots can be a real headache to keep an eye on, especially as people move homes and forget to inform their pension schemes of their whereabouts. Likewise, as companies merge or are acquired, rebrand or move address, it makes the task of locating the whereabouts of pension pots a challenge. In fact research conducted for the charity Age UK in April 2013 revealed that 23% of UK adults have quite simply lost track of at least one of their pensions.
How to track down a missing pension
If you have lost track of any pensions, the Government’s Pension Tracing Service may be able to help you locate them. You can find it at gov.uk/find-lost-pension.
Even if you know where your various pension pots are, it can still be difficult to monitor the overall performance if they are spread about and you are drowning in paperwork from the different plan managers. No wonder then that so many people are oblivious as to how well their pensions are performing.
The performance of your pension investments matters
Keeping a watchful eye on your pensions is however vitally important. Unless you are incredibly wealthy, the accumulated value of your pension plans is going to directly affect your standard of living in retirement. And with people living longer than at any time in the past, you need your pensions to be performing as well as possible to generate a decent retirement income. So, even if you find the world of finance boring and the technical jargon surrounding pensions confusing, the health and whereabouts of your various pensions is too important to ignore.
Combining pensions into one can help you manage them
A potential solution is to combine disparate pension pots into a single Self-invested Personal Pension (SIPP). These are pension plans that enable you to bring together your various pension pots into one place and, in doing so, cut down on admin and gain greater control over your retirement funds.
SIPPs also enable you to choose a wide range of investments from different markets and investment firms rather than having to choose from the often limited and uninspiring choices made available through traditional pension schemes. At the same time, if you don’t want to make your own investment decisions, many SIPP providers now offer ready-made investment solutions as well as options where you can have your investments managed by a professional.
This article is not advice to invest or to use our services. Before you consider transferring a pension, it is important to ask yourself: Will I lose any valuable benefits or features from my existing pension plan? Will I incur any penalties on my existing pension if I transfer? Is it an occupational final salary pension scheme? (in which case it is very unlikely to be advisable to transfer) Have I considered the charges on my current plan? (a new arrangement may be more expensive – especially if you have a stakeholder pension)
If you are near retirement or don’t need the additional flexibility of a SIPP it may not be worth considering a transfer at all. SIPPs are not suitable for everyone. If you don’t want to invest across different asset classes or don’t think you will make use of the investment choices that SIPPs give you then a SIPP might not be right for you. Self-directed investors should regularly review their SIPP portfolio, or seek professional advice, to ensure that the underlying investments remain in line with their pension objectives. Prevailing tax rates and the availability of tax reliefs are dependent on your individual circumstances and are subject to change.