Why it’s prudent to keep track of the value of your pension


Couple assessing their pension

It’s no secret that you’re likely to need to save a considerable sum to support yourself during retirement. Indeed, consumer champion Which? states that the average person needs somewhere between £28,000 and £45,000 each year to live comfortably once they retire. 

Naturally, it takes considerable saving over your lifetime to secure this income. And, as you can imagine, it would be complicated to achieve your saving milestones if you don’t know exactly how much you have accumulated in your pension. 

So, you may be surprised to learn that, according to MoneyAge, 75% of adults in the UK don’t know how much money is in their pension pot. This figure rises to 79% among 55- to 64-year-olds – precisely the group of people this information is crucial for.

If you don’t save enough for retirement, you could end up with a shortfall when you eventually stop working. So, continue reading to find out why you should keep track of the value of your pension, and some ways you can establish it if you’re unsure. 

Think carefully about how much you will need during retirement

The main reason you should keep track of the value of your pension is relatively simple: if you don’t know how much you have saved, you won’t know if you have enough to support your desired lifestyle during retirement.

Of course, everyone is different and the amount you’ll need to live the life you want when you retire will depend on a wide range of variables, from what you plan to do to your health.

Data from Which? shows that, in general terms, you’ll generally need somewhere between a half and two-thirds of the income you were earning while working if you’re to maintain your desired lifestyle when you eventually stop working. 

Of course, this should only give you a rough approximation; the amount you need to save will wholly depend on your goals and dreams during retirement.

For instance, you would likely need to save more if you’re planning luxurious holidays during retirement, or wish to splash out on home renovations or a new car. 

As such, it may be prudent to sit down and carefully plan out your dream activities during retirement. You can then establish how much this will likely cost, the existing balance of your pension, and the extra saving needed to make up the shortfall. Then, you can set saving goals to help you meet your targets. 

Without knowledge of your pension’s value, you could end up with a shortfall when you retire

If you are unaware of the value of your pension, you won’t know whether you need to save more now to make up the shortfall. This is especially true considering the earlier you start saving for retirement, the better. 

Nest gives a useful example to show how advantageous early retirement saving can be. Imagine two people start saving for retirement, each making monthly contributions (including employer payments and tax relief) of £200. If these contributions continued for 10 years, this would total £24,000.

If person one made their contributions between the age of 22 and 32, and assuming their money grew by 5% each year until the age of 60, they would have nearly £125,000 saved.

If person two made the contributions between the age of 32 and 42, making the same assumptions, they would only have around £77,000 saved at the age of 60.

As you can see, giving your wealth extra time to grow can benefit the value of your pension overall. If you don’t know how much you have in total, you could find it’s too late to save enough if you put it off for too long.  

3 ways you can establish the value of your pensions

1. Track down any old pots

Over time, you may have contributed to several pension schemes, especially if you’ve moved jobs throughout your career. So, it’s possible you may have odd workplace or private pensions you’ve lost track of over the years. This is seemingly a common occurrence, too – Unbiased states there is roughly £19 billion in lost pensions out there, spread across 1.6 million different pots. This means that each missing pot is worth an average of £13,000. 

So, it may be worth tracking down any old pots. If you don’t have the paperwork for these supposed missing pots, you should think about contacting your old employers as they may be able to point you in the right direction. 

Or, if you can’t find any signs of your old, missing pensions, you could always try using the Pension Tracing Service, which can help you to find the contact details of your previous workplace or personal pension schemes. 

When you’ve managed to track down your funds, one option could be to consolidate them all into one pot. Not only can pension consolidation make it simpler to keep on track with your saving goals, but it can also relieve some stress as you won’t be dealing with multiple pots and providers. 

Similarly, many pension schemes will charge fees to cover things such as management charges to the scheme administrators or investment charges to relevant fund managers. 

These fees may have changed over the years and no longer be competitive, eating into the total value of your fund over the long term.

So, when you locate old pensions and get on top of the value of your pots, you could consider consolidating your various pensions into one lower-charging fund that better suits your strategy. 

Though, before you consider pension consolidation, it’s important to note that you may lose valuable benefits when you transfer out of certain schemes. Additionally, they may be invested appropriately for your goals and be performing well.

Working with a financial planner can help you to establish the right strategy for you.

2. Get a State Pension forecast

While it may not be sufficient to maintain your standard of living in retirement, the State Pension will provide a valuable and index-linked source of income. As of 2023/24, the full new State Pension provides £203.85 a week. 

As such, getting a State Pension forecast may be worthwhile to establish if you’ve built up enough National Insurance qualifying years. Simply enter your details into the government’s State Pension forecast page to find out: 

  • Whether you’ve qualified
  • How much you could get 
  • When you can access it
  • How you could increase it, if possible. 

If you aren’t eligible for the full State Pension, there may be ways you can “buy” additional qualifying years to boost your income. Speak to us and we can help you to understand if this is right for you.

3. Speak with an expert

Perhaps the best way to establish the value of your pensions is by speaking with a financial adviser. We can help you track down any old pots you may have and, if appropriate, assist you with consolidating them.

We can also determine whether you’re on course to achieve the level of retirement income you need. 

Get in touch

As mentioned, one of the best ways to keep on track of the value of your pension and ensure you’re saving enough to support a comfortable lifestyle during retirement is by speaking to us. 

Please contact us by email at info@investmentsense.co.uk or call 0115 933 8433 to find out how we could help. 

Please note

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 results. 

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.