Could you have a lost pension worth £9,500? Simon Lambert on how to find your old pots

If you want a comfortable retirement, it's vital you make the most of investing into your pension.

The state pension won't be anywhere near enough and it emerged last week that the age we can get at that looks likely to be raised again.

So, if you aren’t one of the lucky few still in defined benefit pension schemes – which are mainly now only reserved for public sector workers – then you need to work as hard as possible to build up your pot for retirement income.

That’s because whereas defined benefit schemes mean your employer is responsible for paying a set pension in retirement, the defined contribution schemes that almost all private sector workers are in put the onus on you.

In these pensions you and your employer make contributions and then you must invest that money to eventually fund your retirement. Making the most of tax-efficient pension saving for retirement is essential.

But while you may be doing that with the work pension you are currently paying into, what about the older pots that you have from previous employers?

In an age when we change jobs more often, it’s easy to end up with multiple pensions from old employers and lose track of them. 

But while there may be a good excuse for letting them slip the net, this often means that you are leaving thousands of pounds lying around. Industry body Pensions UK estimates the average unclaimed, inactive, or lost pension pot is worth £9,470.

Watch the video below to learn what you need to know about old pensions

When life is busy and sorting something out inevitably involves battling lost log-ins and password reminders, it’s very easy to stick remedying this on the to-do pile that never gets done.

But while you won’t lose your old pension by ignoring it or forgetting it – something a surprisingly large number of people I speak to feel they might have done – you are hampering your future chances of an enjoyable retirement.

If you’ve lost touch with a pension from a previous employer, then I highly recommend you watch my interview above with Maike Currie, of PensionBee, on sorting old pensions. She explains everything you need to know about tracking down old pots and whether it is worth moving them or leaving them where they are.

You might be in for a pleasant pension surprise 

It is always worth keeping on top of an old work pension pot, even if you feel that you only worked there for a few years, didn’t save much in and it’s barely worth bothering.

Thanks to the magic of compounded investment returns, small pots can grow into satisfyingly large sums over time. Track down old pots and you might be in for a pleasant surprise.

But for your future retirement it really matters where your pension is invested and the fees being charged on it.

If you left your old work pension languishing in a rubbish default fund with high charges, then it is likely to have grown much less than it would have done in a low-fee index fund that simply follows the global stock market.

And if having read the sentence above, you thought, ‘if I’m honest, I have very little idea where my old pensions are invested’, then stop leaving thousands of pounds lying around where the financial services industry can profit from your inertia.

The good news is that even if you’ve already made this mistake, it’s not too late to fix it.

It will be a little bit of an admin headache but tracking down old pensions should be no more than a couple of hours work. 

And considering the difference this could make to the eventual size of your retirement fund, it may prove to be a highly lucrative use of your time.

As Maike explains in the video above, you need to work out where your pensions are, where they are invested and what the fees are. Then you should consider whether to simply change the investments, move them into your current workplace scheme, or consolidate them into a self-invested personal pension.

You also need to weigh up any reasons to keep them in the current scheme, as some can come with valuable benefits that are locked in even though you have now left the employer.

The main examples are guaranteed annuity rates, more likely on considerably older pots, or a protected pension age, which guarantees you can access the pot earlier than you otherwise could.

The former means you could get a much larger payout from a pension pot than offered by current rates on annuities, a financial product that provides an income for life. The latter means that you won’t be affected when the age at which you can access private pensions rises from 55 to 57 in April 2028 – and potentially goes up further in future.

In recent years, I’ve come across examples of both with family members. My father-in-law discovered an old pension pot had a guaranteed annuity rate of 8.4 per cent. Meanwhile, my wife has an old workplace pension with a protected age of 55 – below the 57 that she will otherwise need to wait to get it at. 

It always pays to read the small print.

But you won’t know any of this – or even how much you have got – unless you track all your pensions down and check the paperwork. So, make that your first step.

Have you unearthed an old pension pot worth a surprising amount? How did you find it? Tell us at [email protected] or in the comments below.