More than a million workers nearing retirement have lost track of pension schemes to which they contributed they contributed in the early years of their career.
The average employee will work for more than 11 companies during the course of their career, but the culture of company-hopping has meant that many employees are not claiming their pensions from funds to which they have contributed.
Further compounding the issue, one in five workers aged between 18 and 34 are unaware they are entitled to claim pension contributions from an early works pensions, according to a survey published by retirement specialists LV
The free Pension Tracing Service tracks down missing or forgotten pensions on your behalf and provides you with an address and advice about how you can claim it back.
Lost pension pots
The government aims to help retirees top up their pension pots by tracking down lost or forgotten pensions, and have improved the Pension Tracing Service to aid in this task. The free service tracks down missing or forgotten pensions on behalf of workers and provides them with advice about how they can claim.
Pensions Minister Steve Webb said:
“People need to make sure they’re claiming everything they’re entitled to in retirement. If you think you may have had a pension in a previous job or you once paid into a personal scheme that you had forgotten about, then the Pension Tracing Service may be able to help you to recover the money you invested.”
In an attempt to address the ongoing problem, the government is due to launch a new initiative that allows workers to transfer pension pots under £10,000 when they change jobs. The new laws will take effect in October 2016.
The scheme will allow workers to have pensions automatically transferred when they change jobs, although there are alternative options if the pension fund of the new company is not as profitable.
Pension transfers
The Pension Schemes Act 2015 introduces safeguards and “greater flexibility” in the transfer of pensions and tax exemptions.
When an employee leaves a pension scheme, they are still entitled to reclaim the contributions when they retire, but the new government scheme may enable them to switch a workplace pension to a better fund, either with a new employer, a private scheme, a self-invested personal pension, or a stakeholder pension.
Just as with pensions, it is important for people to keep track of all their finances throughout their career, and there are new online tools to track all your savings and other investments available online.
Those considering moving their pensions to a different scheme are advised to seek independent financial advice before deciding on the best course of action to take for their retirement.
