We are strong advocates of regularly checking your pension’s performance. However, how can you do this if you don’t have your pension information at hand?
Often, people enroll in workplace pensions but lose track of them over the years as they move through different employers. If this situation applies to you, read on to find out how to track down old, lost, or misplaced pensions.
How to track down your pension.
Losing track of old pensions is a common occurrence. So much so that the government has provided a pension tracing service on the gov.uk website. Your service is straightforward to use, and all you need to get started is some basic details on yourself and your previous employer.
Of course, dealing with pensions is not everyone’s cup of tea. Therefore, you may consider using a specialist pension tracing service or a regulated financial advisor, check out Portafina. They later can also help you assess the value of your pensions once you find them and help you compare them with what is available on the current market.
Valuing your pensions.
If you have lost track of a pension, you have likely stopped contributing to it. Therefore, your pensions have probably grown very little since you stopped putting any money into them. However, the contributions you previously made could be substantial, and you may have quite a bit of money in these pension plans. But how do you go about valuing them?
Once you’ve relocated your old pensions, you should obtain a valuation from the provider to assess their current worth. Also, find out the features of each pension scheme, as these can often be as beneficial as the money the plant contains.
The older your pension plan is, the less likely it is to perform as well as the more modern schemes. So don’t be surprised if you have more money in more recent workplace pensions.
If you find the world of pensions daunting or don’t feel comfortable in obtaining valuations, you can seek the help of a regulated financial advisor.
Transferring your pension funds to another plan.
Having valued your pensions, you may decide to transfer the funds to a more effective plan. This process is called pension switching or pension transfer.
You might choose to do this for a couple of reasons. Firstly, as we mentioned earlier, older pension schemes tend to perform less than their more modern equivalents. Also, you may find that your old pension schemes do not have some of the benefits of newer ones.
For instance, an older pension may not offer the benefit of pension release. This benefit came around due to regulations introduced in 2015, whereby you can access your pension funds at 55, depending upon the type of pension you have.
A regulated financial advisor can assist you with deciding on your best options; whether to transfer or not. They can also assess your financial situation regarding your needs and aspirations, then look at the current market for a range of suitable options.
Pension release.
As mentioned above, legislation introduced in 2015 made it possible for people to access their pension funds from age 55 through a process known as pension release.
At 55, you can take up to 25% of your pension fund as a tax-free lump sum. Your remaining funds, you can either take as further taxable lump sums or leave them invested to provide an income when you retire.
The idea of a substantial cash injection at 55 may seem appealing and can prove helpful if you need cash urgently. However, you should be cautious about taking too much of your pension fund as a cash lump sum, as it could leave you short of income when you retire. Also, taking more than your 25% tax-free allocation could leave you with a considerable tax burden.
Not all pension plans include pension lease as a benefit. A regulated financial advisor can help you decide on your best options regarding pension release, given your circumstances.
Restarting old pension contributions.
Whether you can restart old pension contributions or not depends upon your pension’s terms when you said it up. Even though you might have the option to do so, continuing your contributions may not be your best option. It may be more beneficial to switch the funds to a newer plan.
Once again, a regulated financial advisor is ideal for helping you make the right decision.