Millions of 'forgotten' £9,500 cash pots in UK, how to claim

Saving for a pension is a crucial aspect of our financial planning, enabling us to accumulate a substantial sum for a comfortable retirement in the future. However, it's estimated that a staggering £31.1 billion is languishing in forgotten or unclaimed pension pots across the UK, with an average of roughly £9,500 per pot.

Finding lost pensions is simpler than you might think. The UK Government provides a dedicated online portal to assist you in getting started; all you need to do is input a few details such as your name, previous employers and National Insurance number, reports the Daily Record.

To shed light on why these pensions may be lost and provide advice on how to locate them, Liz Hunter, Commercial Director at MoneyExpert, addresses the key pension tracing queries so you can ensure you claim all the money you've saved throughout your working life.

Reflect on your employment history

Compile a list of all your past employers. If you're having trouble recalling them, an old CV could jog your memory - perhaps you have one stored on your computer or in your email's 'sent' folder from a previous job application?

For most of these roles - particularly full-time ones - you may have contributed to a pension.

Search for the paperwork

Now that you have a list of former employers, sift through your old paperwork and try to find a pension statement corresponding to each role. If possible, note down the name of the pension scheme/provider and any reference or membership numbers.

Do a bit of sleuthing

Are there gaps in your pension list? Don't fret. You have several options. You could reach out to your former employer and request the details of their workplace pension scheme. Be ready to provide your employment dates and job title.

Once you've obtained the details, add them to your list. If you believe you're still missing some pensions, you could utilise the government's complimentary Pension Tracing Service. Their service is user-friendly, but you'll need the name of an employer or a pension provider to use it.

Once your pensions are identified, a pension specialist will get in touch with you to report on what they've discovered.

By now, you should have a comprehensive list of all your pensions. Your next step would be to contact the provider and verify that they have a record of your pension plan.

If they do, find out how much is in your pot and request an up-to-date statement. You'll also want to ensure that your contact details are up-to-date so that you can easily access your accounts when necessary.

Extra tips

Some pension providers may have changed their names or merged with other companies. If you can't locate your pension despite having a statement, you might need to do some additional searching. Try looking online for the pension provider's name or contacting the Pensions Regulator.

Once you have all the details of your pensions, it could be beneficial to type up all the details and file them away (or save them on your computer) for future reference.

Having tracked down all your lost pensions, you might find that you have multiple pots. This can be overwhelming, potentially expensive and they may not be performing to their full potential. Generally speaking, pension consolidation is a brilliant solution. This involves combining all (or some) of these different pension pots into one single pension, making it easier to track and manage.

By consolidating your pensions, you can:

• Simplify management: Managing one pension pot is easier than managing several. Although consolidating your pension pots will take some admin time in the short term, it’s likely to save you time over the long term.
• Receive a single pension payment: Once you retire, having several pension pots means you’d receive several smaller pension payments. By consolidating your pensions, you’ll receive one larger payment.
• Reduce costs: Every pension plan comes with various fees. By having several pots, you’ll be paying these fees to multiple providers. Consolidating your pension pot means you’ll only pay one set of fees.
• Get a better return: Some of your pots are likely to be outperforming others. Transferring all of your pensions into one of your better-performing schemes could mean you make a higher return on your investment over time. Plus, larger pension pots often have access to a wider range of investment funds.

Potential drawbacks of consolidating pensions

• Lose benefits: If any of your existing pension schemes offer a final salary scheme, guaranteed annuity rates or guaranteed growth rates, these are highly valuable benefits. If you leave these schemes, there’s no guarantee you’ll get the same benefits elsewhere.
• Exit fees and penalties: While consolidating your pensions generally means you’ll pay fewer fees in the long term, you could face some fees & penalties in the short term. Check the small print of each of your schemes and note down any exit fees and penalties.
• Risk: You can often reduce the amount of fees you pay, and gain access to better investment options, by consolidating your pension. But it’s important to note that this isn’t a one-size-fits-all rule, and depending on who you transfer your pension to, you could end up worse off.

Consolidation warning

Before you begin the pension consolidation process, it’s important that you know and compare the features and benefits of the plan(s) you are thinking of transferring to. For free and impartial advice on choosing the right one for you, get in touch with Pension Wise by MoneyHelper.