Could you have a lost pension worth £9,500? SIMON LAMBERT on how to find your old pots

If you want a comfortable retirement, it is vital that you invest in the best way possible for your retirement.

State pensions won’t come soon enough and last week it was revealed the age we can achieve is likely to be raised again.

So unless you’re still one of the lucky few on defined benefit pension plans (currently exclusive to public sector workers) then you need to work as hard as possible to build your retirement income pot.

This is because defined benefit schemes mean that your employer is responsible for paying a set pension at retirement, while defined contribution schemes, which almost all private sector employees participate in, put the burden on you.

You and your employer contribute to these pensions, and then you must invest that money to fund your retirement. It’s crucial to make the most of tax-efficient retirement savings for retirement.

But while you may be doing this with the pension you’re currently paying into, what about the old pots you got from previous employers?

In an age where we change jobs more frequently, it’s easy to collect multiple pensions from former employers and lose track of them.

But while it’s a good excuse to let them slip through the net, it often means you’re leaving thousands of pounds lying around. Industry body Pensions UK estimates that the average unclaimed, inactive or lost pension pot is worth £9,470.

Watch the video below to learn what you need to know about legacy retirement

When life gets busy and fixing something inevitably involves struggling with lost logins and password reminders, it’s easy to tack that troubleshooting into the to-do pile that will never get completed.

But while you’re not losing your old pension by ignoring or forgetting it (a surprisingly large number of people I’ve spoken to think they may have done so), you’re also hindering your chances of enjoying an enjoyable retirement in the future.

If you’ve lost touch with a previous employer’s pension, I highly recommend watching my interview above with PensionBee’s Maike Currie on classifying former pensions. It explains everything you need to know about tracking down old pots and whether it makes sense to move them or leave them where they are.

You may encounter a pleasant retirement surprise

It’s always worth keeping an eye on an old job pension, even if you think you’ve only worked there for a few years, haven’t saved much, and it’s not even worth the trouble.

Thanks to the magic of compounding investment returns, small pots can turn into satisfyingly large sums over time. If you track down old containers, you may encounter a pleasant surprise.

But for your future retirement, it really matters where your pension is invested and how much fees are deducted from it.

If you left your old working pension to rot in a high-cost, junk default fund, it would likely have grown much less than it would have in a low-fee index fund tracking the global stock market.

If, after reading the above sentence, you thought ‘honestly, I have very little idea where my old pensions are invested’, then stop leaving around thousands of pounds that the financial services industry could be profiting from your inertia.

The good news is that it’s not too late to fix this mistake, even if you’ve already made it.

It’ll be a bit of an admin headache, but keeping track of old pensions shouldn’t take more than a few hours of work.

And given the difference this can make to the ultimate size of your retirement fund, it can be an extremely profitable use of your time.

As Maike explains in the video above, you need to find out where your pensions are, where they’re deposited and what the fees are. You then need to consider whether you will simply switch your investments, move them into your existing workplace plan, or consolidate them into a self-invested personal pension.

You also need to weigh whether there is any reason to keep them in the current schedule; because some of these may come with valuable benefits even if you are now separated from the employer.

The main examples are guaranteed annuity rates, more likely in fairly old pots, or protected retirement age, which guarantees you can access the pot earlier than you would otherwise.

The first means you could receive a much larger payout from your annuity than current rates on annuities, a financial product that provides income for life, offer. Secondly, it means you will not be affected when the age at which you can access a private pension rises from 55 to 57 in April 2028, potentially rising further in the future.

In recent years, I have come across examples of both in family members. My father-in-law discovered that an old annuity had a guaranteed annual income rate of 8.4 percent. By the way, my wife has an old workplace pension at 55, so under 57, which she would otherwise have to wait to get.

Reading the small print always helps.

But you won’t know any of this – or even how much money you have – unless you keep track of all your pensions and check the paperwork. So make this your first step.

Have you uncovered an old pension pot worth a surprising amount? How did you find it? Let us know editor@thisismoney.co.uk or in the comments below.