October 26th, 2021
Why you should check up on your workplace pensions this October
31 October is a busy day this year. You’ve probably already started buying bags of fun-sized Mars bars, carving pumpkins, and making other preparations for Halloween – but that’s not all you need to be aware of.
While it may not be as well-known, that date is also National Pension Tracing Day, when Brits are encouraged to have a look over their finances in preparation for retirement. This can be useful as it’s often easy to lose track of old pensions, especially if you have more than one.
Since the clocks are going back on 31 October, it can be a good use of that extra time to have a look online and check to see how your workplace pensions are doing. Read on to find how doing so can benefit you.
It can be easy to lose track of workplace pensions if you have several of them
If you’ve worked a variety of jobs over the course of your working life, you may have several different workplace pensions to think about.
In the modern economy, workers are much more mobile and “jobs for life” are less common than they were in previous generations. According to market research by Zippia, the average Brit has around 12 jobs in their lifetime. This means that, unless they’ve opted out, the average person can have up to 12 different pension pots to manage. This can particularly be a problem when you need to inform each of the providers of any change in circumstance, such as when you move house.
According to figures published in the Times, there are an estimated 1.6 million lost pensions in the UK, with a collective value of more than £19 billion. This means that the average lost pension contains around £13,000.
However much is in your old pension pots, it’s important to remember that every little helps when building wealth for retirement. Even if your pots only contain a small amount, its important to make sure that it’s working hard for you.
It’s important to ensure that your pension funds are working hard for you
Retirement is traditionally seen as a time to relax and enjoy the rewards of your lifetime of hard work. That’s why, if you want to be able to enjoy the lifestyle you want, you need to ensure that you have enough wealth to support it.
According to market research from Which?, the average retired individual needs an income of £19,000 each year if they want to enjoy a comfortable lifestyle in retirement. This is a significant sum, especially if you hope to retire before the State Pension Age.
When it comes to building funds for a sustainable retirement, it’s important to ensure that all your money is working hard for you. This is where tracking down old workplace pensions can be helpful.
You can use the government website to track down old pensions
If you’ve worked several jobs over the course of your working life, you may have several workplace pensions and if you do, it’s important to ensure that they’re all growing as effectively as possible.
For example, if you lose track of one, you may leave a portion of your hard-earned wealth languishing in an underperforming fund, or one with high charges. This can mean that in the long term, your wealth isn’t growing as effectively as it could be.
If you think you may have an old workplace pension that you’ve since lost track of, it can be helpful to get in touch with old employers, who should still have old records of them. Alternatively, you may want to try to contact the pension provider that your old company worked with.
Finally, if you’re still having trouble then you could use the government’s pension tracing service to try and find it.
It can sometimes be easier to manage a smaller number of pots, so if you’re struggling to keep track of everything, you may want to consider consolidating your funds.
If you want to know more about whether this is right for you, you may benefit from seeking professional advice. Working with a planner can help you to weigh up the pros and cons of the decision, to help you to grow your pension wealth in the most effective way.
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The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
Workplace pensions are regulated by The Pension Regulator.
This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.