Track down your pension pots and reap the benefits

There’s a lot to think about when you move home, from find­ing the ket­tle to redi­rect­ing the mail. Yet while most of us man­age to tell our bank and GP our new address, only one in 25 remem­ber to let our pen­sion provider know.

This means there is up to £19.4 bil­lion¹ lying unclaimed in pen­sion pots in the UK, accord­ing to the Asso­ci­a­tion of British Insur­ers. That adds up to an aver­age val­ue of £13,000 and around 1.6 mil­lion peo­ple who are miss­ing out on sav­ings that could help fund a more colour­ful retire­ment.

Track­ing down lost pen­sion pots is not always straight­for­ward, but two new ser­vices from Legal & Gen­er­al are set to change things.

“We want to make life sim­pler for the mil­lions of peo­ple who need help locat­ing lost and for­got­ten pots, with­out them hav­ing to have their old pen­sion state­ments to hand,” says Emma Byron, man­ag­ing direc­tor of Legal & Gen­er­al Retire­ment Solu­tions. “Peo­ple change jobs and move home more fre­quent­ly than in the past, but the options for peo­ple look­ing to trace their pen­sion pots have not kept pace.”

Legal & General’s research shows over half (53 per cent) of 45 to 65 year olds have more than one pen­sion pot. It’s not sur­pris­ing; beyond house moves, there’s fre­quent job changes – gov­ern­ment fig­ures show the aver­age per­son has 11 jobs in their
work­ing life² – or lost paper­work to com­pli­cate mat­ters. Many of us have no idea where to begin and are daunt­ed by the pos­si­ble time and effort need­ed if we have a num­ber of schemes to track down.

The gov­ern­ment does offer a ser­vice to find lost pen­sions, but research under­tak­en by Legal & Gen­er­al found that, of those who have tried to locate their lost pen­sion through the government’s Pen­sion Trac­ing Ser­vice, approx­i­mate­ly a third (32 per cent) didn’t have the right details and 16 per cent found it too com­pli­cat­ed³.

“Many peo­ple sim­ply nev­er try, or give up in frus­tra­tion, so there is an urgent need for a sim­ple, straight­for­ward trac­ing ser­vice. It’s hard enough financ­ing your retire­ment with­out miss­ing out on mon­ey you’ve already saved. We want to reduce the com­plex­i­ties of retire­ment,” says Byron.

The Legal & Gen­er­al ser­vice requires the absolute min­i­mum detail on your pen­sions and past employ­ment, just where you worked and when. Once reg­is­tered, you’ll receive reg­u­lar progress updates and details of any pen­sions traced will be shown in a per­son­al, secure dash­board. You’ll be able to see the pen­sions’ cur­rent val­ues and, where pos­si­ble, whether there are any penal­ties, guar­an­tees or valu­able ben­e­fits you should be aware of.

If you want to bring your pen­sion pots togeth­er in one place with Legal & Gen­er­al, also known as pen­sion con­sol­i­da­tion, there is no fee for the trac­ing ser­vice. The stand­alone trac­ing ser­vice costs £100, but this fee is refund­ed if you decide to con­sol­i­date with­in six months.

Con­sol­i­da­tion is not right for every­one, for exam­ple, those with defined ben­e­fit pen­sions may lose valu­able ben­e­fits by con­sol­i­dat­ing, or there may be an exit charge for mov­ing your mon­ey. How­ev­er, you might choose to con­sol­i­date to sim­pli­fy the paper­work and make funds eas­i­er to man­age, or poten­tial­ly reduce fees and charges.

“Not every­one is ready to make that con­sol­i­da­tion deci­sion until they have a bet­ter under­stand­ing of all their pen­sion sav­ings, which is why we’ve cre­at­ed a ‘stand­alone’ trac­ing option for cus­tomers unsure of their next steps,” says Byron.

The main rea­son for con­sol­i­dat­ing, giv­en by 39 per cent in research car­ried out by Legal & Gen­er­al, was to bring all pen­sions togeth­er with a pre­ferred provider. For many peo­ple this makes it much eas­i­er to under­stand how your pen­sion fund is doing and to man­age the admin.

“If you are still sav­ing, it gives you a clear view of the charges you are pay­ing and means you can choose to bring a high­er charg­ing pen­sion into one with low­er charges,” says Byron. “The major­i­ty
(69 per cent) of 45 to 65 year olds we spoke to were unaware of the charges on their pen­sions. You can also clear­ly see what you have and how much it is worth,
to ensure you are on track for the retire­ment you want.

“You can start draw­ing on your pen­sion from the age of 55 but most peo­ple car­ry on work­ing, at least until their state pen­sion age, and con­tin­ue sav­ing.
If you’re 55 or over, look­ing to bring your pots togeth­er and to start to receive a retire­ment income, con­sol­i­dat­ing means you can receive one pay­ment. That makes it eas­i­er to keep track of your finances.”

Some of the deci­sions you have to make about your retire­ment can be com­pli­cat­ed, but Legal & Gen­er­al is com­mit­ted to demys­ti­fy­ing the process, giv­ing cus­tomers all the infor­ma­tion they need to nav­i­gate between dif­fer­ent options.

“At Legal & Gen­er­al, we under­stand that pen­sions can seem over­whelm­ing. Peo­ple now have con­trol over their own retire­ment plan­ning, which is great, and we would always advise they take prop­er advice where pos­si­ble. We are con­tin­u­ing to lead on inno­va­tion with our trac­ing and con­sol­i­da­tion ser­vices,” says Byron.

It’s nev­er a plea­sure to sort out paper­work. But, for about the time it takes to make a cup of tea, you could make a big dif­fer­ence to your retire­ment plan­ning, which is sure­ly time well spent.

1 https://www.abi.org.uk/news/news-articles/2020/05/19.4‑billion-of-pension-pots-unclaimed-
just-because-of-house-moves/

2 https://www.gov.uk/government/news/thousands-more-make-contact-with-long-lost-funds

3 Opini­um Research ran a series of online inter­views among a nation­al­ly rep­re­sen­ta­tive pan­el of 2,008 UK non-retired adults aged 45–65 from the 6th-12th Octo­ber 2020

You can find out more about trac­ing and con­sol­i­dat­ing pen­sion pots with Legal & Gen­er­al at legalandgeneral.com/retirement/pension-consolidation/

Impar­tial retire­ment guid­ance is avail­able from the government’s Pen­sion Wise ser­vice www.pensionwise.gov.uk

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