Millions of workers who are missing £10,000 each urged to 'track it down'
MILLIONS of workers could be missing out on a whopping £10,000 each - in a pension blow. Data shows 4.8 million 'lost' pension pots are currently sitting untouched in the UK, with one in 10 warned it could be worth an eye-watering £10,000 or more.
Jonathan Watts-Lay, Director at WEALTH at work and a leading expert in financial wellbeing and retirement, said: "It isn't difficult to track old pensions down, it doesn't cost anything and could make a big difference to how much income someone has in retirement.
"Auto Enrolment was brought in in 2012, 12 years ago, so many people will have a pension from employers since then. It is worth anyone who thinks they may have a lost pension to put in a little bit of time to check if one of the 4.8 million lost pension pots could be theirs."
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He said: "Bringing all pensions together into one pot isn't just about making it easier to manage. Different pensions could be invested in very different ways, which may mean someone is taking more or less risk with the investments than they are aware of.
"Consolidating pensions means that it isn't necessary to check the performance of multiple accounts, it could save money on the fees charged, and also ensures that there is a joined-up investment strategy which matches the amount of risk someone is prepared to take.
"It is important to check if there are any valuable benefits which would be lost when leaving a provider, for example, some might have guaranteed annuity rates, a protected pension age, or enhanced tax-free cash. It is also important to check if there are exit fees to leave a provider as this may influence your decision."
"It is important to ensure that the choice of investment options available are right, that it is possible to access the pension in the future in a suitable way, and that the provider gives the pension income flexibility needed," he added. He continued, saying: "To consolidate pensions, individuals should get in touch with the pension provider chosen to transfer into. This could be a current workplace pension scheme or another private pension arrangement.
"They will ask for details including the policy numbers and provider names of all the pensions to be consolidated." He added "This information will be available on the paperwork and statements. The pension scheme chosen to transfer into will then begin the process of arranging for all pensions to be transferred into one plan."
"The costs of this can vary but bringing all pensions together may reduce some charges as some providers charge a lower percentage the more that is invested. Check all charges with the provider chosen to transfer into, including charges for advice, setting up the new scheme, platform charges, dealing and transactional charges (including those to access funds via drawdown) and investment management charges," he said. "The time it takes to transfer a pension depends on the method different providers use. Some still send paperwork through the post, which can be a lot slower than secure electronic methods."
He concluded: "Additionally, in November 2021, new measures were put into place to protect pension savers from scams which means that providers are now able to flag or block transfers which show signs of a potential scam. To prevent the transfer being flagged, it is important to ensure that as much information as possible is provided to reassure the provider that leaving is a legitimate transfer."