Pension Tracing

Can I lose my pension in the UK?

You can certainly lose track of it. I’ve had a few cases where people have lost track of schemes and are unsure what they might have had – especially if they’ve changed workplace frequently. Losing the scheme in its entirety is pretty rare, though, if it happens at all.

However, the value of the scheme could be lost or reduced to some extent, possibly because of poor investment performance, or fees and charges. There are fees and charges with most pension schemes, not just from advisors – there could be a platform charge or an investment manager’s fee. If people are not aware of that, it could be eroding the fund quickly.

Pension scams and fraud are terribly sad to experience, but unfortunately there are lots of examples where people have lost their pension because of a scam.

The final thing is that you might be fearful of a pension provider or fund manager going into liquidation or becoming bankrupt. But most schemes are protected by what’s called the Pension Protection Fund and the Financial Services Compensation Scheme (FSCS), so generally that’s highly unlikely.

The most common situation is simply losing track of your pension. People change jobs, or get married and change their name – if we don’t notify the provider, they will be writing to us potentially at a different address or under different details, in which case that scheme could be lost along the way.

How do I find my old or lost pensions?

Any bit of information is a starting point. If it was a workplace scheme or an employer’s scheme, even an old payslip might prove helpful, but we really need the name of the provider. Generally, your National Insurance number is enough to attach you to the scheme, and a policy number is even better.

Over time, schemes have been treated differently. Before 1975, some schemes refunded the contributions when people left that employer, so therefore the scheme no longer exists. That could be the same with defined benefit schemes if people join and leave within a certain time frame – they might just have their contributions refunded.

Typically, speaking to the provider or employer or finding something that could attach you to the scheme would be helpful. There’s also the government tracing page – that’s been set up specifically to try and help people find their old scheme details.

Can you find older pensions acquired abroad, such as in the US?

You can. Again you would need a piece of information to attach you to the scheme. Generally speaking, like the UK tracing service, a lot of countries where there might be UK expats have a similar service. The USA, Australia and Canada, for example, do have pension tracing services.

A bit of digging is required and it’s important to do that, because the UK has international Social Security agreements with different countries around the world to offer protected pension rights for UK expats. There’s also the potential to consolidate schemes from abroad into the UK tax regime.

Even if you are back in the UK, advisers tend to be skilled at tracing these things and we have tools available to us. We could probably give you a good steer to try and chase these things down.

What happens when a pension recipient dies? What happens to the pension fund of the deceased?

We have on occasion amalgamated or transferred pension schemes because of the death benefits. People may not appreciate that schemes have different death benefits, and we’re also in an environment where the recent budget in October 2024 announced that from 2026 pensions will be brought in line with inheritance tax. They will be brought into people’s estates.

That really is a huge shift, because up till now, pensions have been used for inheritance tax planning. The rules were that if the pension holder died before age 75, their nominated beneficiary could inherit the pot entirely tax free. The Labour Government has said it will change that – it will no longer be tax free.

But to answer the question, ultimately it depends on the scheme. To start with the state pension, it depends if it’s pre-or post- retirement and whether their spouse has a pension available. It may be that the deceased person’s spouse could inherit some or all of the state pension.

In some cases there’s a lump sum bereavement payment, where the surviving spouse would receive a lump sum.

With defined contribution personal or workplace schemes, the scheme builds up a pot of money for people to use in retirement. The pension holder should complete something called a nomination of beneficiary form. That really is vital. For most providers it’s a one page form that stipulates who you would like your beneficiary to be.

That beneficiary can then take the pension as a lump sum, leave it invested as their own pension, or possibly convert it to an annuity to give them an income for life. Defined benefit schemes tend to offer really great benefits. They sometimes have spouses’ benefit built into them where the beneficiary might receive 50% of the fund or a lump sum.

Typically, defined benefit pensions don’t offer such high levels of death benefits as some other schemes, and believe it or not, annuities are even worse. Often with an annuity when people have swapped a lump sum for an income for life, that annuity will die with the deceased and has no value beyond that.

There are different permutations of that. You could have a joint life annuity where a surviving spouse or dependent could benefit. There are also types of annuities where you can build up guaranteed value protections.

How can I find out more?

Speak to an advisor who can give you some advice on what type of scheme you’ve got, so that you truly understand the death benefits. Second, people should have a will in place. The third thing is that if applicable, make sure you have completed a nomination of beneficiaries form, because that could be vital.

Is there an app or service that tracks pension funds?

There are lots. When we talk about platforms, we are referring to the fancy online bank accounts that hold the money – many providers have created an app where you can look at your pension funds, get reports and do some forecasting.

There are lots of versions, and there are some self managed strategies where you can invest in your own pension. Or, you can engage an adviser who would discuss the benefits of different platforms and recommend one that’s relevant to you.

Choosing the platform really is the biggest decision. You might want a platform that doesn’t just have your pension on it, but shows investments and savings alongside and you have one app to track all your assets. It might simply be that you want the lowest cost version of these apps, so if you look online, with a bit of digging you’ll probably find some are more suitable to your individual needs than others.

How can a financial advisor help here? Is there anything else you’d like to add?

An advisor’s role is to look at the bigger picture and get a more comprehensive view of your position. Pensions are a big part of life and vital for sustaining ourselves in retirement. But there are other factors that come into it.

We take a holistic view of each individual’s personal circumstances. With regards to the pension, pension planning and retirement strategy – is the current scheme suitable? Is it going to provide your expected income in retirement? What sort of strategy for withdrawal should you consider? That could encompass not just how you access your money, but how tax legislation and current regulation fits in.

You might have more than one scheme and it might be suitable to move those or amalgamate them together. How comfortable are you with your pension being invested in the markets and the choices being made around that investment strategy?

As an advisor I could also help you avoid pension scams and other awful things we hear about. A regulated advisor does generally provide an extra layer of protection. We are accountable to the regulator, the FCA.

Finally, life happens. There are lots of changes for people at different times in life – marriage, divorce, inheritance, health issues. An advisor should be able to manipulate your retirement plan as you move through life based on your needs and objectives.

Clearly I’m a big advocate for seeking advice from an advisor. A lot of people don’t know where to start on that journey, and I think there are two categories to consider when you’re looking for an advisor. Personability is probably the biggest part. Can you work with this person? Do you feel they have a big enough understanding of you and your objectives? Often friends and family offer recommendations and if they’ve had a positive experience with an advisor, that’s a great start.

The second thing is about credibility – that comes down to obviously the advisor’s qualifications, whether they understand the market and are they credible in the industry? If you can tick both those boxes you probably will find someone you can work with between now and retirement to set you up with a decent retirement plan.

THE VALUE OF PENSIONS AND INVESTMENTS AND ANY INCOME FROM THEM CAN FALL AS WELL AS RISE. YOU MAY NOT GET BACK THE AMOUNT ORIGINALLY INVESTED.