HOSPITALITY worker James Wells couldn’t believe his luck when he stumbled upon a small fortune in forgotten pension pots.
The 47-year-old figured he must have retirement savings somewhere he had forgotten about, but he could never have anticipated unearthing four different pots of cash each worth tens of thousands.
James Wells stumbled upon £60,000 in lost pension pots[/caption]
James had hopped between hospitality jobs for his whole career, meaning he often switched pensions and had lost track of some along the way.
Last year, the dad-of-two had been thinking it was high time he got started getting his retirement savings in order when he stumbled across the app Penny, which traces your old pots for you.
James, who lives near Swindon, admitted: “I’ve moved around companies quite a bit, and I just lost track of my pension savings.
“I think I found Penny through Martin Lewis‘ Money Saving Expert or maybe even Twitter. It just caught my eye.”
The app, designed to help people consolidate their pension pots, proved to be a game-changer for James.
“I wasn’t particularly looking for it, but when I saw it, I thought, ‘I don’t really know how many pensions I’ve got,’ so I decided to give it a go,” he said.
James soon discovered four different pension pots dating back to 2003, including three with Aviva and one with a firm called Nest.
They all varied by amounts, ranging from £2,000 to a whopping £48,000.
“I was aware of definitely one of them, but I had moved and not changed addresses with the pension providers, so I stopped getting communications from them,” he explained.
James, who started paying into his first pension at 24, had a gap in contributions while he focused on buying a house.
He resumed pension payments at age 30 and has been more diligent with them ever since.
“I never really paid attention to my pensions before, but something triggered recently, and I thought I should find out exactly how much I’ve got.”
The missing pensions problem
James is one of millions of savers estimated to have lost track of old pension pots worth thousands of pounds.
Research earlier this year by provider PensionBee found one in 10 workers – equivalent to more than three million people – believe they’ve lost a pot worth £10,000 or more.
Around £50billion worth of savings is estimated to be “missing” in total.
How James tracked down his old pots
The process was surprisingly straightforward, James told The Sun.
“I put in my personal details, past addresses, and the companies I’d worked for and Penny did the groundwork.”
Within weeks, the app had tracked down all his pensions from past jobs, and James couldn’t believe it.
“Now I can see exactly how much I’ve got and whether they’re going up or down. It’s nice to finally be on top of my pensions,” James said.
You can download the Penny app via your phone’s app store.
What is pensions auto-enrolment?
HERE’s what you need to know about pensions auto-enrolment:
What is pension auto-enrolment?
Since October 2012, employers have had to enrol their staff into workplace pension schemes as part of a government initiative to get people to save more for retirement.
When does auto-enrolment apply?
You will be automatically enrolled into your work’s pension scheme if you meet the following criteria:
- You aren’t already in a qualifying workplace scheme.
- You are aged at least 22.
- You are below state pension age.
- You earn more than £10,000 a year
- You work in the UK.
How much do I contribute?
There are minimum contributions that you and your employer must pay.
Your minimum contribution applies to anything you earn over £6,240 up to a limit of £50,270 in the current tax year. This includes overtime and bonus payments.
A minimum of 8% must be paid into the pension, with you contributing 5% and your employer paying at least 3%.
What if I have more than one job?
For people with more than one job, each job is treated separately for automatic enrolment purposes.
Each of your employers will check whether you’re eligible to join their pension scheme. If you are, then you’ll be automatically enrolled in that employer’s workplace pension scheme.
Can I opt out?
You can choose to opt out, but you’ll miss out on the contributions from the government and from your employer. If you do choose to opt out you can opt back in later.
How it has helped with his retirement
James is realistic about his retirement plans, but he said this uplift will definitely change his quality of life.
“I think I’ll be working until I’m around 68 or 69 – I might not do the same job and might get paid less, but I’ll definitely be working until government retirement age,” he said.
While it’s not a huge windfall, it’s certainly a boost that will help his quality of life when he retires.
“I think it’s going to boost my government pension and give me an extra however many hundred pounds a month extra, which will certainly help with my quality of life going forward when I retire,” James explained.
James also has other savings, including ISAs for a rainy day, but he finds the Penny app particularly user-friendly.
“The process was very easy. It might have taken me 20 minutes to do, and I didn’t have to write to or phone anybody,” he said.
For those still searching for lost pensions, James has some advice: “Having them all in one place is helpful. Plus if you’re going to change addresses, it’s easier to let one company know rather than four. Plus, you save on fees.”
How does Penny work?
Penny tracks down your pension pots after you provide it with your NI number and any details you have about your old jobs such as the name of your employer, the dates you worked and the name of your pension provider, if you have it.
It automatically combines them into one new pot, which you can view via a dashboard on the app.
The app charges a 0.75% fee for managing your pension but doesn’t charge any extra fees unless you choose to put your money in an “ethical fund”, in which case the charge is 0.78%.
If you decide to go down the route of tracking your old pensions and combining them into a new pot, make sure to ask whether you would be giving up any benefits by doing so.
Some pensions come with valuable benefits attached, such as a guaranteed income or a protected pension age of 55.
How to maximise your pension
By Ellie Smitherman, Senior Consumer Reporter at The Sun.
Pensions can be pretty confusing, and it can be hard to know if you’re doing the right thing.
There are several things you can do to make sure you’re putting away as much as possible for retirement:
Find out what you’ve got
Before you consider your plans for tomorrow, you’ll need to understand where you stand today.
Make sure you track down all of your workplace pension pots too, pension providers tend to send annual statements by post which you can use to find any crucial contact details.
Once you have found all the relevant information you can then contact the pension provider and ask if they have any information about your pension pot and its value.
If you have no luck using this method because you’ve lost previous statements or haven’t received any because you’ve moved house, it’s worth using the Government’s Pension Tracing Service or apps like Penny.
Put them all together to save cash
If you have several workplace pensions that you’re no longer paying into, you might be better off consolidating them into a single pot.
There are several advantages to this, including that by having your savings all in one place, you’ll only pay one set of fees.
You can also choose which pension provider you want to transfer the different savings to, so you can pick the best one for you.
It also makes it easier to keep track of your money, and see how each pension is performing – then you’ll have a good idea
Planning ahead
Financial providers Aviva and Royal London have tools that give you an idea of what your retirement income will be based on how much you’re saving.
Your current employer’s scheme should also be able to give you an idea of what you have and how to project this to your retirement age.
Many employers offer sessions with financial advisers to help you plan for your future retirement.
Increase where you can
The most obvious way to increase your savings pot is to save more. The earlier you start paying money into your pension, the more cash you’ll have in the long run.
Pension expert at insurer Aviva, Alistair McQueen recommends saving at least 12% of your earnings into a pension.
If you’ve left it relatively late to pay into savings it’s a good idea to ramp up efforts.
If you can afford to save more, it definitely pays to do so.
Often workplace schemes will match employee contributions in effect giving you free cash to put towards your retirement – the more money you put in, the more you’ll also get from your employer.
Invest in the right funds
Pension cash is invested by your pension firm. Under a workplace pension money is typically funnelled into a ‘one size fits all’ default fund.
However, if you’re younger you can generally afford to take more risk with your investments. The theory is that you may have some bigger short-term losses but these should be balanced out by bigger gains over time.
Or someone older may want to switch to very low-risk options.
Managing investments is an intimidating task, but even just checking in with your pension performance each year should give you an idea of what your hard-earned savings are doing.
You can speak to a financial adviser about your options if you are not happy and thinking about switching out of a default fund.
Other ways to track down your pensions
There are other services you can use to track down a lost pension, including the Government’s online Pension Tracing Service.
The service is free to use, but only tells you the contact details of your pension provider and doesn’t let you combine and manage pots like Penny.
Pension firm AJ Bell also has a service to locate old pensions and lets you combine them into one pot like Penny.
It takes around four to six weeks to find your pensions.
It is free to use AJ Bell’s pension tracing service, but it will charge you to manage your single pot – depending on what pension you take up, you are charged an up to 0.6% fee.
You could also try ringing your old employers’ HR department to ask for the details of your old pensions.
Provide information like the dates you were employed, as well as your National Insurance number.
Once you have found your old pensions, it may be worth consolidating them into one place so you can keep track of them more easily in future.
Putting all your money into one modern pension scheme could also mean you pay less in fees.
But check with your scheme you won’t lose any valuable benefits by transferring first.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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