Reginald Smith knew that he had a few pensions from previous jobs, but even he was shocked at just how many he found once he and his wife Geraldine started digging.
The 64-year-old health and safety professional has 28 pension pots and counting – as more continue to come out of the woodwork, with the latest located just two weeks ago.
Since 1978, Reginald has worked in nearly 30 jobs as a contractor, health and safety manager, adviser and planner for dozens of firms.
But one year before his planned retirement, the grandfather-of-two from Mansfield, Nottinghamshire, has faced the daunting task of getting his retirement finances in order.
With the valuable help of his wife Geraldine, 64, who is a retired financial adviser, the pair have for the past nine months been tracing the litter of pensions he has left behind during his busy career.
Labour of love: Geraldine Smith helped her husband Reginald find the pensions he accumulated over his career
They have combined more than 18 of Reginald’s pensions so far into one pot of more than £250,000 with PensionBee, an online self-invested personal pension provider.
‘It’s not been easy to find all the policy numbers and names of the pension companies,’ he says. ‘Luckily, my wife has been very helpful and we’ve found £5,000 here or £10,000 there.’
From Rolls-Royce to dog food companies, mining firms, 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 was largely down to the nature of his work. Some moves were his choice, others were out of his hands in the case of redundancy. He has been headhunted on several occasions or has changed jobs to improve his work-life balance to spend more time with his wife, son and the children they fostered.
He says: ‘I would spend two years here and there. I have always been quite good at putting money aside, but I never thought about how many different pots of money I would end up with.’
However, savers like Reginald could soon be able to keep just one pension pot for all of their working lives under plans announced by the Chancellor in November. Last week, Jeremy Hunt confirmed during his Budget that the Government was pushing ahead to introduce sweeping reforms to the pension market.
The proposals would allow workers to continue paying into their former employer’s pension scheme rather than opening a new account every time they move jobs.
Currently, anyone working in the private sector who changes jobs is automatically signed up to the pension scheme chosen by their new employer. This means most workers will retire with their savings split between a dozen pension pots, as workers have an average of 12 jobs across their career.
Holding several pots can make it hard 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 when they move along in their career.
Playing detective: Holding several pots can make it hard for workers to keep track of their total retirement savings
Rebecca O’Connor, of PensionBee, says the rule change would be a boon for savers, as they would no longer be shoehorned into a pension they didn’t actively choose.
She says: ‘People in their 20s are increasingly reporting having as many pensions by the time they turn 30 as people in older age groups because it’s becoming more common to change jobs regularly.
‘If you have several small pots, you are more likely to lose track of them if you don’t think they are very valuable but over time they could have grown substantially.’
A staggering £40 billion of unclaimed pension assets is languishing in long-forgotten pots, according to Gretel, an online service which reconnects people with lost and dormant accounts.
Once an account is identified as dormant, the cash is moved into a central fund put towards good causes through the Big Lottery Fund. But it is still possible to come forward and be reimbursed.
Accounts can be declared dormant if a pension provider’s letters to you are returned saying you no longer live at the address. This is usually after a period of inactivity – where you have not touched any funds for between one and five years.
Reginald has started to reduce his hours and plans to fully retire on his 65th birthday in March next year, when he and Geraldine plan to go on many travels.
In preparation, the couple have sold their £330,000 Victorian house, with a quarter-acre garden and five bedrooms, downsizing to a £178,000 three-bedroom bungalow. They have drawn down on their pensions to renovate the property, putting in underfloor heating, building walk-in bathrooms and widening doors to future-proof it.
He says: ‘Having all my pensions in one place is making it much easier to draw down from them for these kinds of expenses.’
Consolidating pensions can also prevent you from unwittingly paying high fees levied by some firms on legacy pensions. A small difference in fees can cost tens of thousands of pounds over decades.
Savvy saver: Most pension schemes must send you a statement each year
To track down old pensions that you haven’t kept an eye on, first check to see if you have any old paperwork which might have the name of your pension scheme or details of the scheme’s administrator or provider.
Most pension schemes must send you a statement each year, but if you haven’t been receiving them it might be because you changed address and didn’t notify the provider. If you struggle to find any information, contact the pension provider, your former employer if it was a workplace pension, or the Pension Tracing Service, which is a free Government service.
You can usually move a defined contribution pension at any time before you start taking 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 normally invested in stocks and bonds.
In most cases, you can transfer your money to a different provider after you’ve started to take money from it but check the fine print.
You should also check to make sure you aren’t giving up any valuable benefits by transferring out of a scheme – 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 have to get regulated financial advice before you’re allowed to move the pension. Some schemes charge an exit fee, which penalises you for moving money from them.
On his wife’s expert guidance, Reginald has kept several valuable defined benefit pensions, including one local government pension and another mining pension, separate from his new pot.
- Have you got more than 20 pension pots? Email [email protected]
