Old pensions can easily fall by
the wayside. People move jobs throughout their working lives so pensions from
the beginning of an individual’s career can be forgotten and left behind. But
what happens to these pensions if they’re left unclaimed? And could yours be
one of them?
We’re going to take a look at new proposals on what could happen to forgotten pensions, and how to track yours down.
What happens to dormant bank accounts?
Before we start talking about how your pensions and investments could be affected by new proposals, let’s take a look at what currently happens to money in dormant bank accounts.
According to the government website, the Dormant Account Scheme redistributes funds from forgotten bank accounts to good causes in the UK.
Banks and Building Societies don’t have to participate in the scheme. They volunteer to do so. When they do, they channel the funds through an independent body called Reclaim Fund Limited (RFL)
What classes as a dormant account?
Funds can only be transferred from accounts which have been inactive for 15 years or more after the customer is no longer contactable.
The banks and building societies first have to make sure that every effort has been made to reunite customers with their dormant accounts. If this has not been possible the money will be passed on to good causes through the RFL.
Individuals are able to reclaim their funds at any point.
What is the Government proposing?
The dormant account scheme has proved to very successful. In fact, £1.2 billion of funding has been raised so far from dormant bank accounts. This has prompted the government to put forward a new proposal to extend the scheme. It would cover certain types of pensions, shares and bonds.
Will your pension be affected?
The proposition is, after twelve years of inactivity, and the customer being uncontactable, an investment would be classed as dormant. Or six years if only cash is held in the account.
As with the current dormant accounts scheme, owners will be able to reclaim, at any time, money they had in their dormant account.
How to avoid dormant accounts
If you’re not careful, it’s alarmingly easy for the pensions from the beginning of your career to lie untouched. Follow these simple steps and it will be much easier to keep track of the investments you have.
Consolidate what you have.
The easiest way to keep on top of your pensions, investments and savings accounts is to have fewer of them! Where appropriate you may want to consider putting some together in a single service. Make sure that you’re not losing any valuable benefits if you do this – speak to your financial adviser first.
Keep a note and let others know.
As part of your financial plan, it’s a good idea to make a record of all
your assets. Make a note of what is in the accounts and where they are held too.
This will make them much easier to track.
Keep your asset record with your Will to ensure your affairs can be easily sorted upon your death. You may also want to talk to your loved ones about what you have and where they can be found.
Have regular financial reviews.
Ongoing reviews are an essential part of financial planning. If you take time to review your assets yearly, or when your needs change, accounts are less likely to go missing. Plus, you can make sure they are still working for you!
How to track down your lost pension
Do you think you have a lost pension? Not to worry. There are ways and means of tracking it down.
Workplace Pensions. You’ll need to know the name of the employer it was with, or the scheme you were placed into. You will also need to know the dates you were in the scheme. Armed with this information, get in touch and ask for contact details of the administrator. They should be able to help you track down any missing pensions.
Personal Pensions. Check through your paperwork and dig out any information you can find. Hopefully you will be able to track them down this way.
If you’re still struggling to trace lost pensions, try using the Government’s Pension Tracing Service instead. It will search over 200,000 schemes and give you the contact details for any companies you may have a pension with. It’s then up to you to get in touch with those companies and see if they can dig out your missing pots.
Need help? Speak to a financial adviser
Don’t lose your forgotten money! If in doubt about whether you have a dormant pension, or how to get it back, speak to a financial adviser. They will be able to give advice, help with searches and even consolidate some of your accounts if appropriate. Get in touch with us at Face to Face Finance if you need a friendly helping hand.