On 22 November 1718, the notorious pirate Edward Teach, famously known as Blackbeard, met his gory end after a career of plunder and peril on the high seas.
As a former British privateer-turned-pirate captain, Blackbeard struck fear into his enemies with his fierce tactics and lit fuses tangled in his hair.
Ultimately, Blackbeard likely amassed a fortune during his time prowling the waves of the Caribbean – as much as $12.5 million in today’s money, Forbes reports – yet his treasure has never been found.
In fact, according to legend, when he was questioned about the location of his fortune, Blackbeard declared: “Only the Devil and I know the whereabouts of my treasure, and the one of us who lives the longest should take it all”.
Unlike Blackbeard’s hidden treasure, which remains lost to this day, some of your own hidden wealth might be much closer at hand in the form of forgotten pensions.
While Pension Tracing Day has been and gone on 27 October, this could still be the perfect time to assess whether you have any lost pension pots and some ways to track them down – read on to find out how.
You might have lost a pension due to a career change or while moving house
While you might believe that misplaced pension wealth is a relatively niche concern, this couldn’t be further from the truth. According to the Pension and Lifetime Saving Association, 3.3 million pension pots in the UK are considered lost, each with an average sum of £9,470.
One reason many pots go missing is due to the way many people approach the job market now. Unlike previous generations who often held a “job for life”, the average worker today tends to frequently change jobs.
One reason many pots go missing is due to the way many people approach the job market now. Unlike previous generations who often held a “job for life”, the average worker today tends to frequently change jobs.
In fact, a survey from Open Study College indicates that workers aged 25 to 34 have already held six different jobs on average, while older adults nearing retirement have worked in as many as seven roles.
These days, with each new job, you’re typically automatically enrolled in a workplace pension scheme, meaning you could accumulate many pots without even realising it.
Over time, it’s easy to forget about the pensions you held with previous employers, especially if you’ve worked in a range of roles.
Moreover, you might have simply moved house and forgotten to update your provider with a new address. This might come as no surprise considering that 57% of respondents to a Legal & General survey found moving house to be life’s biggest stress.
Just as Blackbeard might have buried treasure on a secluded island only to forget about it in his quest for plunder, you could unknowingly have a trove of pension wealth scattered across various providers.
Workplace pensions are regulated by The Pension Regulator.
There are many benefits to tracing your forgotten pension pots
Thankfully, recovering these “treasures” could considerably benefit your retirement, ranging from the financial to the emotional – continue reading to discover some of these advantages.
You could boost your savings
Perhaps the most apparent benefit of locating lost pension wealth is the potential increase in your overall retirement savings.
According to Standard Life, the average lost pension pot is worth close to £9,500. While this amount might seem small on its own, it could still make a significant difference to the overall value of your retirement fund, ultimately helping you achieve your goals for the next phase of your life.
Lost pots might have accrued compound returns
Even if you only made modest contributions to your lost pots, they may have accrued considerable compound returns over the years.
This happens because any returns generated in your pension are typically reinvested, allowing it to continue growing in a cycle. Consequently, a small amount invested years ago could have grown significantly thanks to this compounding effect. You might have benefited from employer contributions, too.
Locating your old pots could boost the overall value of your retirement fund, especially if they have generated this compound growth. What’s more, if a lost pension is still invested, it could continue to grow, further increasing your fund.
It could give you peace of mind
The benefits of locating old pension pots extend beyond finances – it can also bring you some much-needed peace of mind.
Knowing that you’ve accounted for all of your retirement savings could help you feel more secure and confident about achieving your desired lifestyle in retirement.
Read more: 4 pragmatic ways to feel more confident about retirement
If you choose to consolidate your pots (which you can read more about later), you’d likely have fewer accounts to manage, which can ease the administrative burden and make your finances feel more organised, ultimately resulting in less stress.
Tracking down your forgotten wealth is relatively straightforward
Once you’re ready to begin the search for your buried treasure, there are several steps you can take to locate your lost pensions.
First, it’s wise to reach out to your former pension providers. Most will send annual benefit statements, so make sure to search through any old files, emails, or documents that might contain information about your previous plans.
If you can’t recall any specific details, start making a list of your previous employers, then ask each of them about any pension schemes you might have contributed to during your employment.
If all else fails, you could use the government’s Pension Tracing Service to locate your lost retirement wealth. This free service offers access to a database of workplace and personal pension schemes, allowing you to search for your providers’ details.
While consolidation could make things easier to manage, it isn’t right for everyone
As mentioned, you could consolidate your pensions into a single location once you’ve located them. Think of Blackbeard managing multiple hidden treasures across the Caribbean – keeping track of this would have likely been challenging.
Consolidating your pension wealth into one pot can make it far easier to manage, allowing you to focus on a single fund.
It could offer greater control over how your money is invested, too. By transferring your funds out of older, less flexible schemes, you may gain access to a wider range of investment options.
Additionally, you could make your withdrawals more efficient since you’ll have a clearer understanding of your entire fund’s performance in a single glance.
However, it’s vital to remember that consolidation isn’t right for everyone. By transferring your savings, you could lose out on certain benefits, such as the ability to access your pensions earlier or guaranteed annuity rates.
Some older schemes might even offer a larger tax-free lump sum, which you might lose by consolidating.
Meanwhile, transferring your pots could simply incur fees, which can accumulate if you have multiple accounts.
There is no “one size fits all” answer to whether consolidation is the right choice for you, so it’s worth speaking to a financial planner. We can help you assess whether consolidation aligns with your retirement goals and advise you on the right course of action.
Get in touch
We could help you figure out how to use your re-discovered pension wealth so you can achieve your retirement goals.
Please email us at info@investmentsense.co.uk or call 0115 933 8433 to find out more.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
