Personal Finance Clinic Boost Your Wealth With Old Pensions

When clients come to me for financial advice, it’s not unusual for them to have half a dozen pensions from various jobs across their working life. Nor is it unusual for one or two pensions to have been forgotten about, typically because these were pensions from early jobs they had for a short period of time 30 or 40 years ago. Maybe the situation is the same for you and, perhaps, like many of my clients, you have always thought it’s not worth worrying about this pension as it probably has no value anyway.

The thing is, 40 years is a very long time for an old pension pot to grow. What might have been a few quid when you left that first job aged 22 may be worth thousands now that you’re 60.

Chances are that you lost track of this pension when you moved house, forgetting to update your address with the pension provider. You probably haven’t received a statement in years so you have no idea how much is in the pension.

Look for an old statement

To locate this pension, first look and see if you do have an old statement somewhere with the provider’s address on it and your policy number. If you have these details, write to the pension provider asking for a new statement and requesting that they update your address details. Make sure you provide them with your old and new address and sign the letter. Some providers will allow you to update your address over the phone, so try calling them first.

Use the Government’s Pension Tracing Service

Pension schemes can be bought out and taken over by different providers over the years, so there’s a good chance an old scheme or yours is now managed by a different company.

To find out which company now administers your pension, you should use the government’s free pension tracing service. Click here to visit their website.

Next, write to them with your date of birth and National Insurance number as these details can be used to identify you if you don’t have a policy number. Don’t forget to update your address and provide details of your employment at the time you were an active member of the pension to help them track you down.

Review the old pension

It should be quite exciting to receive an up-to-date statement, especially if you had previously decided this pension was worthless. You may be pleasantly surprised.

Aside from the value, the other important factors to check are the fees that you are paying, whether or not the pension has any special features that make it more valuable, such as guaranteed annuity rates or an option to take more than the usual 25% tax-free cash. You should also check what your money is invested in; the investment mix may be totally unsuitable for you, given your timeframe to retirement and your attitude to risk.

If there are no valuable benefits to lose or any penalties to pay for transferring the pension into a new or existing pension scheme, it’s fairly likely this will be appropriate as the fees on older schemes were nowhere near as competitive as the fees on schemes today.

In fact, sometimes pension values can be completely eroded by high fees, making it important to track down old schemes sooner rather than later.

Make your pension work hard for you

It’s a good idea to speak to a financial adviser as they can check all the relevant details of the scheme and consolidate your pension schemes for you, if it is appropriate to do so. They can also create a suitable portfolio for you to invest in within the pension, help you get your tax-free cash and develop a tax-efficient retirement withdrawal plan for you.

The sooner you can track down those old pensions, the sooner you can get it working hard for you and your retirement.

Lauren Peters, senior financial adviser at Fiducia Wealth Management, is a chartered financial planner. She also holds the pensions specialist and later life specialist qualifications. You can contact Lauren directly via [email protected].

This article was also recently published in the Moulsham Times.