Financial Matters
With David Frederick FCCA | Marcus Bishop Associates | marcus-bishop.com
Vanishing Pots Of Pension
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round one in four adults under 55 years are at risk of losing their share of £37 billion in unclaimed pension funds. Research published last month suggested 1.6 million pensions are currently missing, with each pot worth £23,000. This is not surprising when you consider: the death of the job for life no longer exists; people are changing jobs more frequently; and over 10m workers automatically enrolled into workplace pensions. If you have changed jobs or moved home without informing your pension provider, it’s easy to lose track of those savings. Even though you may no longer be actively contributing into an old workplace pension, the fund may continue to be invested and earn interest which can grow steadily over time. To help pension savers, the Pension Tracing Service (PTS) was established by the government to allow pension savers to track down their pension provider administrator. This free service was launched in 2016. It does not advise if you have a pension with a provider or how much it may be worth. It is a service solely, to identify the administrator of the pension provider. Access to the service will always require pension savers to know their national insurance number plus the different pension pots they may have lost track of over the years. These may be workplace pensions or personal pensions. When searching for lost public-sector pensions, you will be directed to a specific pension enquiry service. Once the administrator’s details has been obtained, pension savers can contact them directly. However, to improve success rates it is advisable to have a record of your employment dates per employer. It should be noted that the PTS does not feature all pension plans in the UK, therefore it may not hold details of some of your pension plans.
42 | SE22 - March 2020
The simplest way to keep track of any pension plan, especially workplace pensions when you change jobs, is to notify your pension provider so they can easily contact you. Your pension provider should be informed whenever you move home or change your personal details, such as email address or phone number. Another option, although one that is more relevant to defined contribution pensions, is to consider holding your pension pots in one place. In theory, making it easier to manage your savings. Defined contribution plans are workplace pension schemes where employees and employers contributions are invested; and the proceeds used to buy a pension and/or other benefits at retirement. This type of pension is by far the most common. Following the birth of auto-enrolment in October 2012, consolidating your pension may not suit other types of pension plans, where exit fees can apply and valuable benefits or guarantees may be lost. Individuals with defined benefit or finalsalary pension plans have a set level of income based on their annual salary when they retire. As such, consolidation may not be the best practice. Some employers have been known to offer incentives for people to transfer final-salary pensions, but those who do so are usually worse off after. Never transfer a defined benefit pension plan or undertake any pension activity without seeking advice from an FCA (Financial Conduct Authority) regulated pension advisor. Older pension schemes may have valuable benefits, such as guaranteed annuity rates, that can be lost following a transfer, which goes some way to explaining why over-55s are usually reluctant to consolidate their pots. The FCA estimated in 2018 pension savers were defrauded out of pensions which had taken some 22 years to accumulate. Never be rushed or pressured into making a pension decision. Furthermore, always reject any unexpected pension offers, and always ensure the advisor is FCA regulated before engaging or changing any pension arrangements.
