POT OF GOLD
Major insurance firm launches simple way for 2.8million Brits to find up to £10k in lost savings for retirement
The typical lost pension is worth £9,500
SAVERS who have lost track of retirement pots can use a simple tool to locate their nest egg.
There are a record number of ‘lost pensions’ worth a staggering £26.6bn sitting in inactive accounts, according to insurance giant Aviva.
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The typical lost pension pot is worth around £9,500 and it’s thought as many are 2.8million are waiting to be claimed.
It comes after more than ten million new people started saving into pensions in 2012 for the first time, as a result of auto-enrolment into schemes by employers.
However, as people move jobs, move home, get married, and lose touch with their pension providers.
To help reunite savers with their cash, Aviva has launched a ‘find and combine’ pension tracing, checking and consolidation service will help people find one of millions of savings pots.
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The service takes approximately 10 minutes to complete to pensions and will also checks them for certain valuable or safeguarded benefits and fees.
Users are then presented with their own online pension report in an easy-to-understand format, to help them consider their next steps.
Savers could consolidate pension pots or speak to an independent financial adviser.
Anyone who uses the service is under no obligation to transfer or consolidate any of the pensions that Aviva finds on the customer’s behalf.
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Since a pilot of the scheme within Aviva’s Workplace pension business in 2022, the firm tracked down and reconnected customers with £87 million of lost pensions, worth an average of £15,000.
The largest single pension found to date is worth more than £350,000.
Could you be owed money from a lost pension, forgotten account or unclaimed benefits
One in fifty of the checked pensions had a valuable or safeguarded benefit attached to the policy, such as a protected tax free sum, a loyalty bonus or life assurance, that would have been lost had they simply consolidated their pensions without checking.
Joanne Phillips, managing director of direct wealth at Aviva said:“It’s not surprising that people lose track of their pensions. Some policies date back decades.
“Savers shouldn’t worry if they think they may have lost a pension.
“They should take reassurance that this money is still waiting for them and with just a few personal details, and as little as ten minutes of time, Aviva’s new Find and Combine service will do the finding for you, saving you valuable time and effort.”
How does the tool work?
Users will need to apply online using Aviva’s tool aviva.co.uk/retirement/pensions/find-and-combine/ giving as much information as you can about where you’ve worked and any pension you might have had.
The application can be expected to take between 10 and 20 minutes.
The tool checks for benefit or if there are charges for moving your pension.
All the information is then brought together in a dashboard where you can decide next steps.
You can bring them together into a new or existing pension.
It's important to look at ongoing fees and charges when deciding where to house your retirement cash.
Lloyds Bank recently launched a 'Ready-Made Pension' for customers of Hlaifax, Lloyds, and Bank of Scotland.
The product can be used to consolidate multiple pensions and has an annual account fee of 0.3%, or a minimum of £5 a month, ongoing investment charges of up to 0.24%, and a transaction cost of 0.14%.
You can also use government's online (or call 0800 731 0193) to help track down lost pensions.
Questions to ask before transferring your pension
IF you're thinking about transferring your pension, here are the key questions to ask, according to the Money Advice Service.
Questions to ask your current provider:
- Can I transfer? There can be restrictions on which pensions you can transfer.
- What is the ‘transfer value’ of my pension? If it’s the same as your pot value, it’s unlikely you’ll be charged a fee when you transfer.
- What fees will I have to pay?
- Will I lose the right to take out my money at a certain age? This is called a ‘protected pension age’.
- Will I lose any , e.g. a guaranteed annuity rate?
- Will I lose the right to take a tax-free lump sum of more than 25% of my pension? This is called a ‘protected tax-free sum’.
Questions to ask your new provider:
- Do I apply to transfer through you or my current provider?
- Are there any fees for transferring in, e.g. set-up fees?
- Do I have to make regular payments into the new pension?
- What investment funds and levels of risk do you offer? You may need help from a financial adviser with this.
- What options do you have for when I want to take my money out?
Should you consolidate a pension?
When it comes to pension consolidation, Aviva research found that only one in three proceed because they fear making mistakes or losing money.
One in five don’t feel confident enough to do it themselves, and a similar number don’t know how to consolidate their pensions.
However, bringing pensions into one pot can have some major financial benefits.
It means just one set of management fees, so you could be better off. And with many providers, the bigger your pension, the lower the percentage charge on fees, which again could mean less of your hard-earned cash is eaten away.
Gathering up your lost pensions can give you a better view of your retirement money and what it could be worth in future, helping with planning.
And just one pension could also mean less life admin too.
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However, before moving you should check whether any valuable benefits could be lost.
And also check for charges and where you can invest. You may be required to get advice which you'll have to pay for.
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.
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