Posted: Tue 26th Apr 2022
This guide is sponsored by PensionBee.
In part 3 of this guide, we explained when and how to make contributions to your self-employed pension. It goes without saying that paying into your pension whenever you can helps give you stronger financial security when you retire.
But perhaps pensions aren't completely new to you. Maybe you've saved into them before, when working in previous jobs. If that's the case, you might want to consider tracking down those old pensions and transferring them into your current pot.
In part 4 of our six-part guide, we explain how to trace previous pensions, and what tools and services there are to help you find those old or lost pension pots.
Listen to episode 2 of PensionBee's Pension Confident Podcast: Keeping your self-employed pension on track
What's happened to my old pensions?
Like many people, you might have worked a number of jobs over the years, and started and paid into several different workplace pensions.
When you change jobs, you leave behind your company pension. If you don't transfer it to your new workplace pension (or indeed a personal pension) and leave it where it is, it becomes what's known as a frozen pension.
Over time, your pension balance may rise or fall depending on how the fund performs, but it receives no new contributions as neither you nor your employer are paying into it anymore. You’ll still be charged fees for the ongoing management, and the higher the fees, the faster your balance will go down.
While keeping track of one pension might not seem like much of an issue, it becomes trickier if you have several pension pots to think about. If you move house and don't give your pension provider(s) your new address, you won't receive your pension statements. Without that paperwork, you may eventually forget about those pensions altogether.
This isn't uncommon. Indeed, the Association of British Insurers (ABI) estimates that as of March 2022, there are 1.6 million pension pots lost or forgotten about, with a combined value of around £19.4 billion. The amount of money in 'dormant' pensions is expected to reach £750 billion by 2050.
How do I find my previous pensions?
If you have various pensions scattered around, it can be difficult to know not only where your money is held, but how the investments are performing and what you're paying in fees.
If you can't remember who your pension provider is, and you no longer have the paperwork from when things were first set up, what can you do?
Ask your previous employer
The first place to start is your old employer, as the company might have your details on record. Contact its HR department – they'll likely need to know:
the dates you were employed with the company
the dates you were enrolled in its pension scheme
your National Insurance number
If you're successful in getting the necessary information from them, you'll then need to contact the pension provider directly.
If you worked in the public sector, visit the Department for Work and Pensions (DWP) website for information on public-sector pensions.
Use the Pension Tracing Service
The government's Pension Tracing Service can help you locate lost pensions. It's free to use, and you can search a database to find your employer's name and the pension provider it uses for its workplace pension scheme.
Once you've answered a couple of questions, the service will present you with the pension provider's contact details. You can then get in touch with the provider to begin the process of tracing your lost pension.
You can search the Pension Tracing Service's database online or phone the service on 0800 731 0193. Be aware that it can only give you the contact details for your pension provider – it can't confirm whether you have a pension or what your pension is worth. Only the pension provider can supply that information.
Get help from a pension provider
Another way to track down a lost pension is to consolidate all of your old pensions into one. If you have a pension already, you can usually consolidate your previous pensions with that provider quite easily. If not, you can get the ball rolling by starting a new pension with a pension provider.
Keep in mind that providers each have different rules in terms of what they allow as part of the pension transfer process. But if you're able to move all your old pensions across, the provider will usually manage the entire process and may be able to help you trace those lost or forgotten pensions. Typically, they'll need some basic details, such as a policy or pension number.
How do I transfer my pension?
Thanks to recent changes to the law, it's never been easier to transfer your pension to another provider. Often, transferring your pensions will make sense from a financial and convenience point of view.
However, there are many cases in which this move makes less sense, so be sure to consider everything carefully before switching.
Many providers, including PensionBee, will do the hard work for you, though there are certain restrictions when it comes to transferring your UK pension pot into another UK pension scheme, or indeed overseas. You can find more information on the government's website.
Should I transfer my pension?
There are two major benefits of transferring your pension: control and value.
By transferring old pensions into a single plan, you have everything neatly in one place. That makes it easier for you to keep a close eye on how your retirement savings are performing. Furthermore, transferring to a brand-new plan may provide added value, with opportunities aplenty to greatly reduce the management fees you're paying.
However, significant exit charges (something which the government is cracking down on) and special benefits derived from existing schemes could mean your best option is to leave your pensions alone.
How long do transfers take?
The time it takes to transfer your pension can vary from a couple of weeks to even a number of months. This is because some providers use an electronic (fast) transfer, while others employ manual (slow) methods.
While PensionBee is geared towards receiving transfers electronically, the speed at which this process is completed is down to the methods your old provider employs.
What does it cost to transfer a pension?
Before you transfer your pension, it's important to research what fees your provider may charge for you to exit its scheme.
These charges will either be in the form of a:
percentage of your savings
In any case, the provider will deduct the charges from the balance of your pension.
The amount you may be charged will vary depending on your provider. So having a sound understanding of the impact these charges will have on your pension pot, both in the short and long-term, is crucial.
Capital at risk.
*As with all investments, capital is at risk and the value can go down as well as up.
In part 5 of this guide, we look at how best to plan for retirement.
Read the other parts in this series: