Boost your pension by £20,000!

You could have thousands of pounds waiting for you in a forgotten pension. Here's how to track it down...

Not everyone will agree with me when I say this, but if you want to build up a decent nest egg for your retirement, a really great way to do this is by investing in a pension.

I started my pension a few years back when I joined a company that had a very good pension scheme in place. Since then, I have moved on to do two different jobs, and I now have a different pension scheme through lovemoney.com. But my old pension is still just sitting there doing... well I’m not quite sure what.

The trouble is, it can be so easy to lose track of a pension if you move jobs or move house and don’t update your details, and for a while, you might not give it a second thought.

But if you want to ensure you receive all of your entitlements in retirement, it’s important that at some point you find out exactly how much money you have sitting around in various pension schemes.  

Track it down!

Fortunately, if you have lost track of a pension – whether this is a workplace pension scheme or a personal scheme – there is an easy way to trace it. And that’s by contacting the Pension Tracing Service.

A survey of customers found that one in five found a lost pension after using this service - pretty encouraging stuff. What's more, this resulted in average weekly payments of £16 a week or an average lump sum of £1,900, with some people receiving both a weekly payment and a lump sum.

For 5% of people, weekly payments were more than £100 and 7% received a lump sum of more than £20,000! This isn’t a sum of money you want to be wasting!

So if you think you might have a pension somewhere that, up until now, you’ve completely forgotten about, it’s well worth contacting the Pension Tracing Service to find out.

The Pension Tracing Service has access to over 200,000 pension schemes and will therefore use this database to search for your scheme. And the best bit is, this service is free of charge! So you really have nothing to lose.

Top tips

You can contact the Pension Tracing Service by filling in the online form or by calling 0845 600 2537 (lines are open 8am to 6pm). Of course, the more information you can provide the Pension Tracing Service with, the more likely it is that you will be able to get an up-to-date contact address for the scheme you are tracing.

If you’re tracing a company pension scheme, you should work out the following:

• Whether the employer traded under a different name
• The type of business the employer ran
• Whether the employer changed address at any time
• When you belonged to the pension scheme.

Meanwhile, if you’re tracking down a personal pension scheme (in other words, one that you set up with a pension provider, such as a bank or life assurance company), you should work out the following:

• The name of the personal pension scheme
• The address of where the personal pension scheme was run from
• The name of the bank, insurance company or building society involved with the personal pension scheme.

All of these details will be of help to the Pension Tracing Service. But as a minimum you should be able to provide the name of the employer you worked for or the name of the company you bought your pension from if it’s a personal scheme.

If you don’t have many details, the Pension Tracing Service may still be able to help you – however, the process may take a lot longer. If the service isn’t successful in tracking down your pension, you can contact the Pensions Advisory Service which can do some further digging.

Recent question on this topic

• Bart53 asks:

  Transfer or stick with personal pension

  • 
    MikeGG1 answered "You do have a high-risk mix. Transferring to FP could give the IFA a chunk of commission, but you..."
  • 
    Bart53 answered "Thanks very much Mike that's very helpful. Don't understand the MVA part, could you expand/explain..."
  • Read more answers

Next steps

If the Pension Tracing Service is successful, you will need to contact the company that holds your pension and decide what to do next.

If your pension seems to be performing well, you may just want to leave it where it is. You may even be able to resume contributions.

If you’re pretty happy with the pension scheme but you’re not happy with the funds you’ve invested in, you should be able to switch to new funds. Just bear in mind there may be switching charges for this.

Alternatively, if your pension fund is underperforming, you might want to consider transferring to a completely new scheme – after all, it can be a lot easier to have all of your old schemes in one place. However, it can be expensive to do this – some older style schemes can charge a heavy penalty if you transfer. So you need to look into this and decide whether it’s worth it. You can find out more in Get the most from your old pension schemes.

Finally, if the value of your total pension savings is no more than £18,000, you can take this money as a tax-free lump sum. This is called ‘trivial commutation’.

However, you can only do this if you’re aged between 60 and 75. What’s more, if you have several small pensions that come to a total of more than £18,000, you will not be able to take advantage of this. You should also note that only 25% of the total value is tax-free – after that, the balance will be taxed as income.

If you’re feeling confused about any of this, you should ask an independent financial adviser for help.

More: Five reasons why ISAs are better than pensions | Two weeks left to boost your pension by thousands