Pensions can often seem like a complex, confusing topic, however, it is important to voice your questions if you have any to ensure that you have a good understanding of your financial situation.

Recently, a connection one of our advisers met with was in distress about their job and their workplace pension scheme. Having built this up over their 15 years with the company, they had become unhappy but did not want to leave with the fear of losing their pension pot. Eventually, they worked up the courage to ask the question “Would I lose my pension if I changed jobs?”

The adviser was then able to quickly debunk that myth, explaining that the money is theirs to – essentially – ‘take with them’ and that there are many options available to manage this moving forward. This individual then left the conversation feeling uplifted that they could make a decision about their future without their pension worries holding them back. This peace of mind is one of the most valuable and rewarding things we, as financial advisers, can offer.

Historically, most people worked in the same job for many decades, often in a defined benefit (or final salary) pension scheme, which offers a guaranteed retirement income and usually involves a simpler management process than many other pension schemes today.

Then, when automatic enrolment was introduced in 2012, employees were, as the name suggests, automatically enrolled into a scheme within their employers’ cycle. This means that, in the modern working environment where it is common to job hop several times in a decade, more workers now have numerous pension pots from different employers.

When you leave a job, it is then your responsibility to remember the details of your pension such as your login information, plan number and the provider, as well as keeping all of your details such as address, contact information and beneficiaries up to date.

If you need assistance in tracking down a pension, there are online tools to help, or your financial adviser can also assist you through this. This is a task that ends up on the back burner for many, however,  meaning there is often found to be an eye-watering amount of individual pension pots left unclaimed. The Pensions Policy Institute estimated that there may be up to 1.6 billion lost pension pots in the UK, totalling around £19.4 billion altogether.*

Based on current regulations, all that a pension provider is required to do is write to you once when you near retirement age. If they have the wrong details on file, which is your responsibility to update, they have no obligation to track you down or attempt to contact you again.

Each of these pots will have different investment strategies, benefits and charging structures in place. Therefore, if you keep on top of their management, there can be benefits to keeping your pensions separated. This may ring true for any particularly low-cost plans or those older policies that have guarantees attached to them.

There is also the option to combine your various pots, known as pension consolidation. This means that you only need to manage one (or, at least, fewer than you once had) pension rather than several, and when circumstances change you only need to update your details once. Your Integrity365 adviser can help you to review your various pension pots and decide on a scheme that would suit your preferences best, based on their individual ‘bells and whistles’.

Another route that may be appropriate for some is to work with a financial adviser to set up a private pension which you can move your workplace pensions into – almost like transferring between bank accounts.

As you can see, there are a variety of options when it comes to managing your workplace pension upon leaving a job, and it is worth keeping on top of this to ensure your hard-earned retirement funds are in your control. If you would like any help tracking down, managing or consolidating your pensions, please do not hesitate to get in touch with an Independent Financial Adviser on 01463 242242 who would be happy to answer your questions.

Sources:
*The Pensions Policy Institute 2018 ” Lost pensions: what’s the scale and impact?“

Author: MacDonald Partnership

Published: 23rd April 2024