How to track down your long-lost pensions – and consolidate them

Not so long ago, people typically stayed in one job for most of their working lives – but these days studies estimate the average person has around 11 jobs over the course of their career.

With auto-enrolment now in full swing – meaning any employee aged over 22 who earns more than £10,000 per year automatically being signed up to a pension at work – that’s a lot of pots collected along the way.

Little wonder, then, with people moving around so much (and these pots not following them), there is a risk of losing track of funds.

Alice Haine of BestInvest, a stockbroker, said: “That’s a lot of paperwork that can get lost along the way, particularly if people lose passwords and login details, or move home and forget to notify their old workplace pension provider or former employer of their new address.”

More than 2.8 million pension pots are considered lost, an increase of 75pc on 2018 figures, according to October data from the Pensions Policy Institute, with the value of those missing pots estimated at £26.6 billion.

Across the 22.6 million people who have workplace pensions in the UK, this amounts to almost £1,200 (£1,181) each which is disappearing from retirement pots, according to PensionBee, a pension firm.

Becky O’Connor of PensionBee, said: “With the average pot size in the UK at around £20,000, losing track of just one pension could make a big difference to your retirement income.”

If you think you’re missing a pension or two, it’s vital to find out before you stop working. This is especially important right now, with the cost of living crisis and higher inflation threatening to spoil retirement plans.

Ms O’Connor added: “As many people face retirement with an income lower than they might have hoped for, it‘s vital to make sure there isn’t a pension somewhere with your name on it that you don’t know about.”

The Government has proposed introducing a “consolidator” system so that pensions of £1,000 or less are automatically scooped up. But until this new scheme materialises it is up to you to take control of your savings.

What about the Pensions Dashboard? 

The Pensions Dashboard is a big government project designed to prevent this “lost pots” problem.

With this portal, UK savers can log in and get an oversight of their entire record, including their state pension.  

While this has been heralded as a potential solution, the service is yet to launch. It was originally pencilled in for 2019, but is now not expected to open for business until the second half of 2026.

Tom Selby of AJ Bell, said: “Pension dashboards have the potential to make life much easier for people trying to locate, and ultimately combine, retirement pots built up over the course of their working lives. The decision to delay mandatory connection to dashboards is hugely disappointing and people will now question whether they will ever be created at all.”

So what steps can you take yourself in the meantime?

The good news is that there is plenty you can do to track down old pensions and bring them into one place. Not only will this help you feel more organised and in control, but there are other advantages, too. 

How to track down your pensions 

If you’re not sure where to find old pensions, the Government’s free Pension Tracing Service is a great place to start.

Ms Haine said: “It’s a straightforward online questionnaire – just four questions and five steps to complete. You will need the names of your former employer or pension provider. Once you’ve given these, the service scans its database and provides contact details.”

It’s then over to you to get in touch with that pension provider to find out how to access your old pension.

Ray Black of financial advice firm Money Minder said: “This service won’t, of course, tell you how much is in your own pension pot, but it’ll bring you closer to finding out.”

While other services do exist to help you trace old pensions, these often come with a fee. Be sure to ask.

Understand your current pension value

Having multiple pots could be costing you financially – through management fees or poor investment performance. Old style pension might have high fees or, contain valuable guarantees you would not want to lose by moving the money to another provider.

Ms O’Connor said: “Once you have been reunited, it might be worth checking that you are happy with details such as investment plans and charges, in case they no longer meet your needs. Equally, if you’re approaching retirement, you also need to ensure you’re happy with the way you can access your pension.” 

Should I contemplate consolidating?

Having tracked down any missing pensions, you may be wondering whether it makes sense to consolidate them.

If you decide to go ahead, you could use a service, such as PensionBee, to bring them together for you. Again, be sure that the provider you chose is right for you. Fees vary as does the investment choice you have. Some full personal pension firms, like Hargreaves Lansdown or Interactive Investor, will let you buy thousands of funds and individual shares. Others restrict you to low, medium and high risk strategies.

What are the pros? 

One of the advantages of consolidating is convenience – you only need one login to access your old pension pots.

Mr Selby said: “Having a single retirement pot is much easier to track and manage than having various pensions with different providers. You could also benefit from lower costs and charges, increased income flexibility and more investment choice by switching provider.”

Older pension schemes, he adds, often charge more than modern pensions.

He said: “At the same time, plenty of workplace schemes don’t offer a full range of retirement options, or restrict your investments to the firm’s own in-house funds.”

While this is designed to be broadly suitable for most people’s needs, there are times in your working life when it might not be right for you.

Furthermore, it can also be easier for loved ones, who might have to manage your affairs later on, if pensions are all in one place.

What are the cons? 

There may be plenty of reasons why combining pensions can be a good idea, but there are potential downsides, too.

For starters, you need to look at any exit fees. Happily, these are increasingly a thing of the past, but they could still affect some pensions.

Ms Haine said: “You should also check there aren’t any valuable benefits attached which you may lose by transferring, such as preferential annuity rates or terminal bonuses.”

Bear in mind that not all pensions are easily consolidated. For example, defined benefit schemes (which pay a retirement income based on final or career average earnings), cannot be transferred without financial advice if they are worth more than £30,000.

That advice is hard to come by, according to Ms O’Connor.

She said: “This follows a spate of instances where people have been badly-advised to move old defined benefit pensions.”

As most workers now have defined contribution plans (which are invested in the stock market and give you a pot of money when you reach pension access age, rather than a set income amount), this should not be too much of an issue.

Ms O’Connor added: “These can be moved much more easily.”

Doing nothing is just fine 

If you are completely happy with wherever your old pensions are, there is no obligation to move them. 

Keep on top of your pensions 

Given that having multiple pensions can lead to a lot of paperwork from different companies, being organised is key.

Mr Black said: “As findings show the average Briton moves home at least eight times in their life, it’s easy to have post going missing. It’s therefore crucial to keep your details updated.”

Mr Black also recommends keeping a record of statements when they arrive, and filing them away somewhere safe.

He added: “This will save you a lot of admin further down the line, and could help you avoid an unnecessary headache when you come to retire.”