7 steps to knowing the pension funds you already have
If you’re already a member of your workplace pension scheme, you probably know how much you contribute on a monthly basis, and what your employer pays into the pot.
Most of us will have several employers during the course of a lifetime and the idea of having a ‘job for life’ isn’t a familiar scenario for many of us these days. It’s become perfectly normal to work for many different companies throughout your working life, and as a result, accrue a number of workplace pensions with different providers.
Sometimes, the difficulty is finding those long forgotten pots, and then making the money you’ve already saved work harder. If you have some ‘forgotten or lost pensions’ to find, and would like a hand to get a clear picture of what you’ve already got, we’re here to help.
The good news is, it’s easy to locate the pensions you’ve already got, and once you’ve done it, it’ll become much easier to work out how much your savings could give you in the future.
Plain and simple
This is a step-by-step guide to getting on top of your retirement savings.
1. Your State Pension
The State Pension forecast estimates how much you might get from the State Pension based on your National Insurance contribution (NIC) records. It also calculates when you can draw your State Pension (this might be different from when you access your personal pension), how any future National Insurance contributions might grow that amount, and how to increase the final amount – if applicable to you.
It’s even more important to check your NIC records if you've had any periods off work in your lifetime. For instance, due to ill health or maternity leave. You may want to consider plugging any gaps to make sure you'll receive the full amount you're entitled to when you retire.
2. Locate all your personal and workplace pensions’ details
You should receive a pension statement each year, but if you don’t have the paperwork for any reason, it should be easy to get hold of simply by contacting the pension provider directly. If you don’t have their details, you can use the Department for Work and Pensions (DWP) tracing service online, or phone 0800 731 0193.
Simply search for the name of the company you worked for or the name of the pension plan. The site will give you the pension scheme’s details, and you can then contact the provider for further information.
If neither of the above work, you can contact the company you worked for directly.
Once you’ve located your pensions, you could consider bringing them all together into one pot. Before you do that you should be comfortable with the investment choices that you make as you may lose features, protections, guarantees or other benefits when you transfer.
A transfer for consolidation purposes is from one capital at risk pension product to another – so the value of your investments after any consolidation can still fall as well as rise and the final value of your consolidated pension pots may be less than paid in.
Any new funds you move your money into will have their own set of risks that will be detailed in the fund information that will be available to you. If you’re unsure whether this is right for you or need advice, please speak to a financial adviser – there may be a charge for this.
Lost pots might add up to more than you think.
3. Fill in the details
After locating your pension information, check:
- How much are the pension(s) currently worth?
- Are any contributions still being made?
- What are the charges for management of the pension and its investments?
- What income is the pension estimated to pay on your chosen retirement date?
Make sure all your information is up to date.
4. Your nominated loved ones
It’s important that your pension provider knows who you’d like to leave your pension to if you pass away. Is there a person nominated to receive any death benefits?
Make sure the schemes have the right contact details and the details of your nominated loved ones – this will ensure that they will be able to get hold of them, should they need to. Don’t forget, you need to update your provider whenever you change address, or when your personal circumstances change.
5. Work out when you can retire and how much you’ll need
Looking into the future and trying to imagine how much money you’ll need to live on during retirement can be tough, but our retirement planner can help. It has a handy income-needs calculator, and lots of information to help you understand your options – what your income could be, how to get guidance or advice, and how to make your plans happen.
6. Think about how you want to take your pension
The options for taking retirement benefits are pretty flexible and there are lots of options to choose from. While this is great news, it’s important to understand these to make full use of them.
Our retirement planner will give you more information on your options, including flexible regular income, guaranteed regular income, a combination, or leaving it invested and taking it later.
One important choice that you have is to take a tax-free lump sum, which can be up to 25% of your fund, and you can access this from age 55, if you want.
Further ‘lump sums’ or income from your pension is subject to tax at your personal income tax rate, so keep in mind that cashing in too much at one time could push you into a higher income tax band. Remember, the money you pay personally into your pension benefits from tax relief, it is only the withdrawals that are taxed.
Planning the most tax-efficient way to access the savings you have worked hard to build is key. You may well have some, or all, of your tax-free personal allowance unused, and it's possible that it could be used against income you take from your pension. As everyone's tax situation is different we can't give you hard and fast rules, but we suggest checking your own limits and thresholds before deciding how and when to access your pension.
This information is based on our understanding of current taxation law and HMRC practice, which may change. Always consider tax implications.
7. Seek further help if you need it
You should be able to follow most of these steps yourself, but if you need more information, our Aegon Assist team will be able to help. This service provides guidance and the team will be happy to talk you through your options for retirement.
The Aegon Assist service is free, the team don't give you advice but will give you information which will allow you to make your own informed decisions, planning for the retirement you want. However, if you're in any doubt, we recommend you seek regulated financial advice, which may incur a charge. You can find a financial adviser through unbiased.co.uk.
Pension Wise also offers free and impartial guidance to help you understand your options at retirement. You can visit them at Pensionwise.gov.uk or call 0800 138 3944.
Retirement decisions don't have to be made alone. If in doubt, seek guidance from your employer or Aegon, or advice from an independent adviser.