Could your career strategy put your retirement at risk?

According to estimates from the Department for Work and Pensions (DWP), reported by Your Money, the average younger worker will have around 11 jobs during their lifetime.

With the era of a “job for life” largely behind us, and younger generations switching employer more regularly than ever, it can make planning for your retirement more complex.

Unlike your parents or grandparents, who may have benefited from a gold-plated “final salary” pension scheme from their employer, it’s likely that you will accumulate lots of smaller pension pots along the way.

Indeed, research conducted by Aegon shows that just under two-thirds (63%) of millennial and Generation Z workers have more than one pension pot.

If you’ve had multiple employers and paid into a range of workplace schemes, it’s easy to forget about small pension pots you’ve accumulated. Aegon found that, out of the 63% of younger workers with multiple pension accounts, 22% are aware of the fact that they have lost track of at least one.

Continue reading to find out how easy it is to forget about your pension, how this could harm your retirement, and how we can help you track down your lost pots.

Losing track of your pensions is common

When you get a new job, you will typically be automatically enrolled on a workplace pension scheme.

While this ensures you’re putting money aside for your future, it can lead to more complexity. If you’re someone who moves jobs frequently, you could end up with multiple pension funds that are easy to forget about.

In fact, the Times report that there are approximately 1.6 million missing pensions in the UK, with an estimated collective value of £19.4 billion.

Having multiple pensions scattered around can cause confusion in the best case, and harm your retirement prospects in the worst.  If you lose track of your funds, it could mean that you don’t have enough to retire on your terms, or you end up working longer than you need to.

Finding all your old pensions can boost your wealth and help you maintain the lifestyle you want once you’re no longer working. A good place to start is the government’s pension tracing service who can help you to locate any older pensions you may have lost track of.

If you have had several jobs and are unsure what pension savings you have accumulated, you may benefit from speaking to us. We can help you develop a retirement strategy and assist you in finding and, if appropriate, consolidating lost pensions.

We can help you consolidate your pensions if appropriate

Once you have found all your various pension savings, it’s time to have a think about how they will be able to support the lifestyle you want in later life.

One option is to consolidate all your pensions into one fund. There are several benefits to this approach.

Firstly, having your pensions located in one place means you will only have to deal with one provider. No longer will you have to spend hours managing different pots – bringing them all together under a single provider gives you more control over your retirement fund and can make it much easier to manage.

Merging your pots could also boost their overall performance and increase the value of your pension. Some older pension plans may have higher management costs than modern schemes, so it can be beneficial to compare different providers and combine your pension savings under a single arrangement that suits your needs.

Additionally, if you have multiple pensions, you may also be paying several different sets of fees. Bringing everything together can help you avoid unnecessary costs, meaning your savings won’t be eaten up by high charges.

Many older pensions may also be underperforming or only provide you with a limited range of investment options. By merging your pension funds under a single provider, you may be able to take advantage of a broader range of investment choices. This could allow you to diversify your portfolio and ensure you’re taking the amount of risk you’re comfortable with.

While pension consolidation can make things easier, there are also some factors to consider. For instance, some older pensions may come with guaranteed annuity rates that could provide a higher income during retirement. However, you may lose these guarantees if you move providers.

You may also face exit penalties, depending on your provider. The amount you may be charged usually depends on how much money you have saved in your pension pot, so it is essential to bear this in mind before you decide to switch.

Before consolidating your pension pots, it’s vital that you create a firm plan. We can track down all your various pensions, establish the values, and create a plan that ensures you’ll have enough to live the life you want when you retire.

Get in touch

If you would like to discuss your pension and the best ways to manage your savings, email us at info@harperlees.co.uk or call 01277 350560.  We’d be delighted to help.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would impact the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.