Conducting regular pension reviews is sensible, but it is not always easy to do. You may have misplaced or lost your pension paperwork. Even worse, you might have pensions that you don’t know about!
Although this might seem unlikely, you would be surprised at the number of people who have lost track of inactive private or workplace pensions. This brief guide aims to explain how you can track down lost pensions and how you can maximise these for your retirement.
How can you track down your pension easily?
Losing track of a pension is no cause for despair. There is a relatively straightforward means of locating lost or misplaced pensions, which is freely available on the gov.uk website. To start the process, all you need is your previous employer’s name or details of any personal pensions you have.
Of course, pensions are not the most simple things to understand. Therefore, you might want to consider using a financial advisor to help you locate old pension schemes. They can also assist you with establishing a valuation of your pensions and giving you a comparison with similar products on the market.
What are your pensions worth?
Pensions that you have misplaced or lost track of are unlikely to be continuing to grow. That’s because you’ve probably stopped paying into them. However, you could still have a significant amount of money invested in these lost pensions. Therefore, you should get a valuation of all your old pensions so you can make an informed decision on what to do with them.
In this situation, it may be advisable to consult with a regulated financial advisor. They can look at the amount you have invested, the pension’s features, and the charges you are paying to give you the best advice.
For instance, older pensions tend to come with higher fees. If you have stopped making contributions to these, your pension is unlikely to grow. Even worse, the high costs might even cause it to shrink.
Of course, you can carry out this exercise yourself. However, if you have several old pensions or find dealing with pensions complicated, a regulated financial advisor might be your best option, check out Portafina.
Can you transfer your funds to a more effective pension scheme?
The short answer to this question is yes. The name given to this process is pension transfer or pension switching. As we alluded to earlier in this article, the older your pension plan is, the less likely it will give you a good return.
Having an older pension is a common reason for transferring your pension. However, there are other reasons why you might want to transfer your pension. For instance, changes to how you can access your pension might entice you to switch pension schemes. The regulation passed in 2015 allows you to access your pension funds from age fifty-five.
If you are struggling to assess your pensions’ values, consider consulting a financial advisor. They can not only give you a valuation of your pensions but can consider your financial goals and aspirations and help you decide your best options.
Do you understand pension release?
We briefly mentioned regulations passed in 2015 that changed how people can access their pensions. These regulations are referred to as Pension Release.
When you reach fifty-five, you may be allowed to access up to 25% of your pension funds as a tax-free cash payment. The remainder of your funds can be left invested in your pension. Alternatively, you can take the remainder as lump sums if cash, but these will be subject to tax.
Before taking cash lump sums, you should consider the implications. Firstly, taking out too much money as lump sums means you could leave yourself short of income in retirement. Also, accessing more than 25% could significantly affect the amount of tax you have to pay.
Pension release doesn’t apply to all pensions, so you’ll have to check whether yours is applicable. Consulting a financial adviser will help you navigate your options to ensure you make the best choice.
Can you restart making contributions to an old pension scheme?
Recommencing payments into an old pension plan depends upon the terms on which you set it up. Even if you have the facility to start your contributions up again, it may not be your best option. It would be best if you indeed considered getting a current market value, then deciding whether to restart your pension or transfer it to a new scheme.