Finding your missing pension
Unclaimed pensions hold billions of pounds of savers’ money. Smart Investor looks at how to track down your lost accounts.
For most of us, our pensions are likely to be the largest asset we have after our houses, so it seems surprising that they could often be mislaid. But as we move house and change jobs more frequently than before, lost pensions are becoming a growing problem.
There are now around one million unclaimed pension accounts in Britain, holding a combined £3 billion of investments. More than a fifth of people have lost track of some or all of their old pension accounts, according to a 2013 survey by charity Age UK.
Sometimes this is simply because savers have moved and not notified the pension plan provider. All pension plans are required to send out an annual statement of benefits, so if you know you have a pension plan and have not received any updates from it recently, you may have fallen into this trap.
Such pensions will usually ultimately be claimed. But in other situations, the plan may be genuinely forgotten – perhaps because the member was automatically enrolled in a company pension scheme and contributed for a short time before leaving.
If you think this could have happened to you, make sure you review your records to see if you might be owed any overlooked benefits. It’s important to do this as soon as possible, rather than waiting until you are approaching retirement, because tracking down lost accounts can become much more difficult as time goes by.
How to trace a pension scheme
If you think you might have mislaid a pension, your first step should be to look for any information you may have on the scheme, such as the name of the pension provider or administrator.
They are responsible for running the scheme and are your first point of contact. If you are unable to find these details and the pension was a company pension plan, you should try contacting your former employer to see if they can help.
Where you have no record of who manages the plan and cannot contact your former employer, you should contact the Pensions Tracing service [Link to: https://www.gov.uk/find-lost-pension ]. This is a free online service provided by the government that has details of more than 200,000 company and personal pension plans.
The more information you can provide, the greater the chance that the Pensions Tracing Service can find your pension. So it is important to check your records thoroughly and gather as many details as you can before submitting a tracing request.
Should you transfer your pension?
Once you’ve tracked down an old pension scheme, the next question is what you should with it. This is an important decision that could have a substantial impact on the benefits you ultimately receive, so you are strongly recommended to seek advice from a qualified independent financial adviser before making a decision. You should also bear in mind that, just like all investments, pensions can fall in value.
There are two main types of pension plan in the UK:
- Money-purchase plans – also known as defined-contribution schemes – are pensions where you or your employer made fixed payments into the plan and what you get at retirement depends on the investment returns your plan earns. Such pensions may be either a company pension plan (where they are often known as a “group personal pension”) or a personal pension plan. As discussed below, it is possible to transfer a money-purchase plan into a Barclays Stockbrokers pension account.
- Final-salary schemes – which fall into the category of “defined-benefit schemes” – are offered by some companies and commit to paying you a fixed pension when you retire, based on factors such as how long you worked for the company and your salary when you left. Other defined-benefit schemes may base their benefits on your average salary during your membership of the scheme or some other similar measure. Barclays Stockbrokers will not accept transfers from final-salary or other defined-benefit schemes.
The benefits from final salary schemes are usually very valuable and there are few circumstances in which it will make sense to transfer out of these pensions. However, depending on your personal circumstances, there may be advantages to transferring an old money-purchase plan to a new provider. This is most likely to be the case if:
- The plan has high charges; or
- The plan offers access to a limited number of investments.
In these circumstances, you may find that transferring and consolidating old pension plans allows you to manage them more easily, cheaply and flexibly, although you do need to be sure that you are not giving up valuable rights under your existing scheme. You can transfer existing pensions into a personal pension plan (usually offered by insurance companies), a Self-Invested Personal Pension (SIPP), which gives you more control over how your money is invested, or sometimes into a pension scheme offered by your new employer. Please bear in mind, however, that SIPPs in particular are not likely to be appropriate for those who are not experienced investors having the skill and time to devote to this.
What to do next and how Barclays can help
If you are interested in transferring your old pensions into a SIPP, Barclays Stockbrokers offers two types of account that may be useful to you. The Barclays Stockbrokers SIPP is a SIPP that allows you to invest in a wide range of asset classes through Barclays Stockbrokers, including funds, exchange traded funds, shares, bonds and investment trusts.
Alternatively, you may want to consider our Pensions Trader Account if you wish to hold assets such as commercial property or discretionary managed funds or if you already have a SIPP or Small Self-Administered Scheme (SASS) with another provider. The Pension Trader Account allows you to use our state-of-the-art platform to invest pension assets held with a third-party SIPP administrator. Again, please note that these accounts are not suitable for most individual investors. You need experience, skill and time to make a success of them. Remember: you are risking your income in retirement; just like all investments, SIPPs can fall in value and you may end up with less than you invested.
You can find more details of the Barclay Stockbrokers SIPP and the Pension Trader Account here.
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