Published On: Tue, Oct 29th, 2019

Pension warning: Simple oversight could see millions lose thousands in retirement | Personal Finance | Finance

From settling in to updating LinkedIn, a person will often experience a lot of change when starting a new job, and this can include a workplace pension. New research has suggested that after moving jobs, some people have lost track of whether they have pension pots from a former time in their life.

According to research by Portafina, one in 10 (10 percent) of workers have no idea if they have a pension from a previous job.

The pension company said that the findings suggest millions of people could be missing out on thousands of pounds in retirement.

Since the introduction of auto-enrolment, more than 10 million Britons have been enrolled in a workplace pension.

However, the research found that only a quarter (25 percent) of 2,000 employed adults surveyed in September 2019, are aware that upon moving jobs, their new employer will set up a new workplace pension for them – and that it is their responsibility to manage old pension pots.

READ MORE: Pension rules are changing next week – what it means for you and your retirement decisions

What’s more, Portafina suggests that three-quarter (76 percent) of Brits claim they are unaware of the value of old pensions today.

Commenting on the findings, Jamie Smith-Thompson, Managing Director at Portafina, said: “Moving into the digital world is a big positive step forward for the pension industry.

“Initiatives like the Pensions Dashboard currently being developed by the government will go a huge way towards helping the nation to better manage and keep on top of their pension savings.

“While it’s great that there are more online options emerging for moving or consolidating pensions, it can come with huge risk.”

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Mr Smith-Thompson continued: “If it feels too easy to move your pension, such as only taking a couple of clicks to complete the process, then it’s time to think twice about whether this is the right move for your hard-earned savings.

“How your pension will be invested, the fees charged, and how your new scheme compares to the old one, are all questions you should confidently know the answers to before making any decisions to jump ship from your current provider.

“The bottom line is, it’s best to seek expert help before making any final decisions.

“Having all your pensions in one place can be very convenient and sometimes saves on charges.

“But depending on the pensions that you are consolidating, if you are not careful you could end up paying more in charges, losing valuable benefits and guarantees, or seeing your investments placed in funds that are not suitable for your goals.

“A regulated financial adviser will analyse every aspect of your pensions, giving you all the facts you need to make an informed decision, unlike most combine-and-go online platforms. With something as valuable as your retirement savings, it makes sense to be absolutely sure.”

Recently, the estimated cost of different types of lifestyle in retirement were published by the Pensions and Lifetime Savings Association (PLSA).

The report, from Loughborough University and the PLSA, describes three different standards of living, pitched at minimum, moderate, and comfortable, and estimates the annual income required to pay for it.

For a single person, it’s estimated to cost £33,000 for a comfortable retirement, £20,200 for a moderate lifestyle, and £10,200 for the minimum band.

The estimated costs increased for people who live in London and the South East.

For couples, the figures came in at £47,500 for the comfortable lifestyle, decreasing to £29,100 for a more moderate option, and £15,700 for the minimum.


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