It is a fact these days that many young workers aged 25 to 34 have already had as many jobs as those aged 65 or over. The days of one job and one pension for life have gone! This is a situation that is likely to get worse with the ongoing introduction of auto-enrolment and a proliferation of pension pots for each period of employment.
In a time when retirees will need all the pension they can get, losing anything is quite careless. And the fact that it is their own money - well - I can say no more!
There are two real solutions here. The first is to keep a record of everything. When you get that leaving statement make a note of the date, the value and the name and address for correspondence. If you know who the plan is with, you can easily make enquiries on it and do not forget to notify the provider of any changes of address.
The second option is to move the pots into one as they arise. By consolidating them in this way you will always know where they are, and they can also be managed with other money in line with a coherent investment strategy.
Generally, consolidation would appear to be the most convenient way forward for the majority of people, making it easier to manage retirement funds in one place whilst keeping costs lower with paying for just one pot as opposed to multiple pots. It is possible that, in the future, there will be an automatic ‘pot follows member’ system. However, there are some pension types which should be left and not transferred.
Why would you not want to consolidate? Well, there are a number of possible reasons:
Billy Mackay
Marketing Director, AJ Bell