23-05-2022

Have you lost track of your pension plans?

Tracing pensions from years ago can be a hassle.

Although the government’s Pension Dashboard will allow people to see all of their pensions in one place when it comes into effect in a few years’ time, it will not solve the problem of savers paying fees to multiple providers across all their pensions.

Unsurprisingly, more than 3.6 million Britons admit they have no idea how many pensions they have and risk paying more in fees than necessary, according to new research [1].

The number of workers with small pension pots of under £1,000 has surged dramatically in recent years, as auto enrolment has allowed millions of people to benefit from workplace pensions for the first time.

With the average employee now changing jobs 11 times [2] in their working life, people are increasingly building up many small pots and are often losing track, misplacing paperwork or forgetting about previous schemes they are invested in.

The Pensions Policy Institute (PPI) predicts the number of small pots will triple by 2035 to 27 million[3].

While savers already have the option of combining their pensions, 1 in 10 have no idea how to do this, while 12% say it’s just too much hassle.

As a result, more than two-fifths (44%) say they’ve never bothered to track down savings from a previous employer.

Even if you have not had that many jobs, you may still have a number of different pensions to keep track of. Pensions can be confusing, but there is an alternative way to help keep on top of them. Pension consolidation may allow you to combine some or all of your defined contribution pensions in one place.

Consolidating your pension means fewer statements to keep an eye on, along with fewer and potentially lower management charges.

However, not all pension types can or should be transferred.

It’s important that you know and compare the features and benefits of the plans you are thinking of transferring.

It can be a complex decision to work out whether you would be better or worse off combining your pensions, so it’s essential to obtain professional financial advice.

If you have any questions about this article get in touch via our contact form, or if you would like to speak directly to one of our advisers please don’t hesitate to contact me in person on 01246 560 570.

Source data:

[1] The research was carried out online by Opinium across a total of 5,010 adults aged 18+. Data is weighted to be representative of the GB population. Fieldwork was carried out between 12th to 18th March 2021.

[2] Click HERE for more information. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/945319/s mall-pots-working-group-report.pdf

[3] Click HERE for more information.   https://www.pensionspolicyinstitute.org.uk/media/3545/20200723-deferred-members-final-report-for-the- website.pdf

[4] Finder, Pension Statistics 2021