How do you find and consolidate old pensions?
Through a tracing service and your own records — and it is worth doing, because a very large number of pension pots are lost, with billions of pounds sitting unclaimed in schemes whose members have moved house and forgotten them.
Why pots get lost. People change jobs frequently, auto-enrolment creates a pot at each employer, schemes are taken over or renamed, and providers write to addresses people left years ago. The pot is not lost in the sense of gone — it is lost in the sense that nobody knows where you are.
How to find them:
The government's pension tracing service, free, which gives contact details for schemes based on employer name.
Old payslips and P60s, which show deductions.
Contacting former employers directly.
Checking with providers you may have dealt with.
Why consolidating can help: one place to see everything, potentially lower charges, simpler investment choices, one set of paperwork for beneficiaries, and easier planning.
Why it is not automatically right, and this is where people make expensive mistakes:
Guaranteed benefits. Older policies may carry guaranteed annuity rates far above anything available now, or defined benefit promises. Transferring these away can destroy substantial value, and it is the single biggest risk in consolidation.
Exit penalties, on older contracts.
Protected tax-free cash above the standard proportion, and protected early retirement ages, both of which can be lost on transfer.
Life cover attached to some old schemes.
Lower charges in the old scheme than the new one, which is common with some workplace schemes.
What to check before transferring anything: ask each provider in writing for the transfer value, the charges, and whether any guarantees, protections or penalties apply. That single letter prevents most errors.
Advice is mandatory above a threshold for defined benefit and safeguarded benefits.
Beware transfer scams, including unsolicited contact, promises of unusual returns and offers to access a pension before the minimum age.
Update your beneficiary nomination wherever the money ends up.
General information, not financial advice.