Reginald Smith knew he had some pensions from previous jobs, but even he was surprised to see how many he found once he and his wife Geraldine started digging.
The 64-year-old health and safety professional has 28 pension funds and counting, as more continue to pop up out of nowhere, the last of them located just two weeks ago.
Since 1978, Reginald has worked in nearly 30 positions as a contractor, health and safety manager, consultant and planner for dozens of companies.
But a year before his planned retirement, the grandfather-of-two from Mansfield, Nottinghamshire, has faced the difficult task of getting his retirement finances in order.
With the valuable help of his wife Geraldine, 64, a retired financial adviser, the couple have for the past nine months been tracking down the pension rubbish he has left behind during his busy career.
Labor of love: Geraldine Smith helped her husband Reginald find the pensions he accumulated throughout his career.
So far they have combined more than 18 Reginald pensions into a single fund of more than £250,000 with PensionBee, a self-invested online personal pension provider.
“It hasn’t been easy to find all the policy numbers and names of the pension companies,” he says. “Luckily my wife has been a big help and we’ve found £5,000 here or £10,000 there.”
From Rolls-Royce to dog food companies, mining companies, universities, energy supplier EDF Energy and chocolatier Thorntons, Reginald has worked across all sectors, collecting pensions with each job.
He says the large number of jobs is largely due to the nature of his work. Some measures were his choice, others were out of his reach in the event of dismissal. He has been pursued on several occasions or changed jobs to improve his work-life balance and spend more time with his wife, his son, and the children he raised.
He says: ‘I would spend two years here and there. I’ve always been pretty good at saving money, but I never thought about how many different pots of money I’d end up with.
However, savers like Reginald could soon hold a single pension pot for their entire working life under plans announced by the Chancellor in November. Last week, Jeremy Hunt confirmed during his budget that the Government was moving forward to introduce radical reforms to the pensions market.
The proposals would allow workers to continue contributing to their former employer’s pension plan instead of opening a new account each time they change jobs.
Currently, anyone who works in the private sector and changes jobs is automatically enrolled in the pension plan chosen by their new employer. This means that most workers will retire with their savings divided among a dozen pension funds, as workers hold an average of 12 jobs over the course of their career.
Having multiple funds can make it difficult for workers to keep track of their total retirement savings. The Chancellor’s reforms would give new employees the right to choose which pension scheme their employer pays into as they progress in their career.
Playing detective: Having multiple funds can make it difficult for workers to keep track of their total retirement savings
PensionBee’s Rebecca O’Connor says the rule change would be a boon for savers as they would no longer be forced into a pension they did not actively choose.
She says: ‘People in their twenties increasingly report having as many pensions by the time they turn 30 as people in older age groups because it is becoming more common to change jobs regularly.
“If you have several small pots, you are more likely to lose sight of them if you don’t think they are very valuable, but over time they could have grown substantially.”
According to Gretel, an online service that reconnects people with lost and dormant accounts, a staggering £40 billion in unclaimed pension assets is languishing in long-forgotten funds.
Once an account is identified as dormant, the cash is moved to a central fund earmarked for good causes through the Big Lottery Fund. But it is still possible to show up and receive a refund.
Accounts may be declared inactive if letters sent to you by a pension provider stating that you no longer live at that address are returned. This usually occurs after a period of inactivity, where you haven’t hit any bottom for between one and five years.
Reginald has started reducing his hours and plans to retire fully when he turns 65 in March next year, when he and Geraldine plan to do a lot of travelling.
In preparation, the couple sold their Victorian house for £330,000, with a quarter-acre garden and five bedrooms, downgrading to a three-bedroom bungalow for £178,000. They have used their pensions to renovate the property, installing underfloor heating, building bathrooms and widening doors to prepare it for the future.
He says: “Having all my pensions in one place makes it much easier to use them for these types of expenses.”
Pension consolidation can also prevent you from inadvertently paying the high fees that some companies impose on inherited pensions. A small difference in rates can cost tens of thousands of pounds over decades.
Smart savings: most pension plans are required to send you a statement every year
To locate old pensions you haven’t been paying attention to, first check to see if you have any old documents that may have the name of your pension scheme or details of the scheme administrator or provider.
Most pension schemes are required to send you a statement each year, but if you haven’t received them it may be because you changed your address and didn’t notify the provider. If you are having difficulty finding information, contact the pension provider, your former employer if it was a workplace pension or the Pension Tracking Service, which is a free government service.
You can generally transfer a defined contribution pension at any time before you start withdrawing money from it in retirement. This type of pension has become the most common and is a pot of money that you and your employer contribute to and which is usually invested in stocks and bonds.
In most cases, you can transfer your money to a different provider after you’ve started receiving money from them, but check the fine print.
You should also check to make sure you are not giving up any valuable benefits by transferring out of a plan, for example, a guaranteed annuity rate option or additional death benefits.
If the value of any guaranteed annuity rate, or other valuable benefit, is more than £30,000, you may need to obtain regulated financial advice before you are allowed to transfer the pension. Some schemes charge an exit fee, penalizing you for transferring money from them.
Under his wife’s expert guidance, Reginald has kept several valuable defined benefit pensions, including a local government pension and a mining pension, separate from his new fund.
- Do you have more than 20 pension funds? Email jessica.beard@mailonsunday.co.uk
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