Do you know what all your pension pots are worth? Are you confident you’ve not lost track of one from decades ago? If the answer to both questions is ‘yes’, congratulations – you’re doing better than most.
Millions of us have pensions we have paid into over the years that we now have no idea what they are worth.
In fact, there are 1.6million pension pots that Britons have lost track of altogether. They are worth an average of £13,000 – and some considerably more. Even funds that we have a record of, many of us couldn’t put a value on.
Pot of gold?: Millions of us have pensions we have paid into over the years that we now have no idea what they are worth
The much-heralded pensions dashboard was supposed to be the solution to this. The pensions industry has been working with government for years to create a platform where everyone can log on and see the value of their state and private pensions.
But last month, the so-called Pensions Dashboard Programme (PDP) announced it would not be ready until 2023 – four years later than its original deadline.
But you don’t have to wait for the PDP to get its act together. Here’s how you can make your own pensions dashboard.
Start with a state pension valuation
THE state pension is the backbone of most people’s retirement income. Even so, millions of people don’t know how much state pension they will receive.
It’s now relatively easy to find out its value. You will need to go through a process to prove your identity, and then you will be given an estimate. Go to gov.uk/checkstate-pension.
There have been some instances when people have been given the wrong information. If yours is not in line with what you were expecting, query it. Even if you are already receiving your pension, there could still be errors. For example, there have been cases where married women who retired on small state pensions before April 2016 have been underpaid.
If your forecast reveals you are not on track to receive the full state pension, you may be able to fill in gaps or buy years.
Track down your old workplace pensions
This could prove one of the most lucrative couple of hours you’ll ever have. Get a pen and paper, make a cup of tea and think through every job you have had. Try to get a value for every pension you accumulated.
If there are any unaccounted for, you have two options. If the pension is relatively recent – roughly from the last 20 years – you should be able to get in touch with your former employer to ask for details.
If you left them a while ago, you may have to use the Government’s Pension Tracing Service. This will tell you who controls old pension schemes and their contact details. You can do this if you have already retired. Kay Ingram, director of public policy at retirement specialist LEBC, says it’s not uncommon for people to discover old pensions in retirement.
She says: ‘A retired woman came to a colleague of mine recently for advice about releasing equity from her home. She had debts she needed to pay off and thought that equity release was her only option.
‘But my colleague tracked down a couple of pensions from decades ago that she didn’t know she had. They were worth more than enough to pay off her debts.’ Ingram says it’s common for those in their 50s and 60s to lose track of old pensions they had from jobs several decades ago.
Now update your contact details
Once you have found all your old pensions, make sure the providers know where to find you. Only one in 25 people remember to tell their pension provider they have moved home.
This, combined with name changes when people get married or divorced, means that pension pots worth around £19.4billion have gone unclaimed.
Look at all of your pensions together
Part of the appeal of the pensions dashboard is that it should give a snapshot of exactly what pensions you have. If you discover the amount you have won’t meet the lifestyle you hope for in retirement, you can devise a plan to make up the difference.
You can look at all of your pension savings in one place by creating a simple spreadsheet on a computer. But there are lots of apps that allow you to link up your pensions. Some go a step further than a pensions dashboard would because they allow you to see all your savings, debts and investments in one place.
‘People don’t just rely on pensions for their retirement saving, so seeing everything together makes sense,’ says Ingram.
Apps include Hummingbird, PensionBee and Moneyhub.
You could try to consolidate the pots
Once you’ve all of your pensions in one place, you could consider consolidating some – or all – of them. The advantage is that they will be easier to keep track of and you may be able to lower fees.
Angela Lloyd-Read, a chartered financial planner at Connor Broadley Wealth Management, says: ‘Consolidating your pensions could save you money as some providers may reduce charges when pension savings reach a certain level. Moving from a more expensive provider to a cheaper one could save a lot of money over the many years a pension will be invested for.’
Clare Reilly, at online pension provider PensionBee, adds that you need to do a few checks before consolidating pensions. She says: ‘Be careful to safeguard benefits such as attractive guaranteed annuity rates. And be wary of exit fees when moving pensions.’
Reilly believes consolidating pension pots can help create a sense of pride over what you have built up, which will make you more likely to look after and pay more into it.
Finally, are you saving enough?
There is no ‘one size fits all’ when working out what you will need in retirement. But the Pensions and Lifetime Savings Association has put together some useful rules of thumb at retirementlivingstandards.org.uk. Ingram adds: ‘Many people are happy to have a more modest lifestyle pre-retirement so as to have less of a financial adjustment when they retire. Others prefer to enjoy life to the maximum now – knowing they will have to adapt later.’