- "Forgotten pensions are billions in total
- Auto-enrolment set to increase that number
A couple of decades ago it was the norm to leave school, find a job and stay in that same job until retirement.
Times have changed though and new research has shown that the average worker in the UK will have six jobs in their lifetime and this doesn’t include any temporary employment. Having six jobs in a lifetime can mean that people accrue a number of different pension pots which they will no longer be paying into.
Thawing out your frozen pensions
Frozen pensions can refer to occupational or personal pensions. Any employer contributions will cease when changing jobs. They will still be invested or be increased by inflation depending on the type of scheme it is. Although a frozen pension can be consolidated, it can’t be claimed until retirement. Therefore, if people are changing jobs more frequently, they run the risk of acquiring numerous frozen pension pots which may not be working as hard for them as they could.
The cost of forgetting your pension
According to a report in The Telegraph last year there is £757bn of frozen pensions which people have paid into and have forgotten about when they have moved jobs. When you leave a job, any workplace pension scheme you may have will automatically stop and if you have a number of jobs it can be tricky to remember what pensions you’ve signed up to, never mind find them. Furthermore, in general the pensions available through workplace schemes tend to be ‘one size fits all’ which take a general assessment of how you feel about risk and how much you want to put in each month without taking into consideration your personal circumstances or specific plans for the future.
Professional advice makes certain
If you are planning on starting a new job or taking money out of your pension pot whilst you continue to work then it’s a good idea to seek professional pension planning advice to ensure you make the most out of any pension savings you already have and can continue to contribute to these if appropriate.
Starting a new job
It’s common now for people in their fifties and over to change jobs and for people who have already retired to go back to work part-time or to gain temporary work in retirement. Unfortunately redundancy is also a frequent occurrence with almost 2.7 million people in the UK being made redundant between 2008 and 2012. For many people, redundancy doesn’t mark the end of their career and they are keen to get back into work and often temporary work is stepping stone to a full-time position.
Age is no problem
Sheena Purshouse, Managing Director of Sheffield-based recruitment firm Sue Ross Recruitment says that finding work should not be a problem for older job seekers as long as the skill sets required are there, “Age isn’t usually a problem for people when looking for a job as we do not include date of birth on a CV which generally encourages clients to choose the experience of an individual over their age.”
She continues, “Most of the people who come to us looking for work in their late fifties and above tend to be looking for temporary work. This is often because people have decided to take early retirement but are not yet ready to stop working or alternatively, individuals have been made redundant and are looking to use temporary work as a stepping stone to get back into work. We’ve never had a problem placing older people in temporary positions as their experience levels are invaluable and temporary work suits their lifestyle and the client’s needs such as covering maternity leave.”
Don't forget auto-enrolment
The introduction of auto-enrolment pensions has meant that temporary workers and people who have a number of permanent positions will be automatically enrolled into the pension scheme (provided they will earn the equivalent of £9,440 or more a year) of the company they’re working for, no matter how long they work for the company.
Where to go for advice
If you have recently retired or been made redundant and are looking to go back to work, either in a temporary or full-time position, then it’s a good idea to get your pension up to date before you start your next job. There is plenty of advice online including from Age UK, The Pensions Regulator and The Pensions Advisory Service. However, there is no substitute for gaining advice specific to your situation from an independent financial advisor. An IFA will be able to provide advice on consolidating your pension and making the most of your funds which are currently locked in frozen pensions. Ultimately, even if you have accrued just a couple of hundred pounds in a number of pension pots, this money is yours to claim and could be put to good use in an up to date pension which you can continue to contribute to whether you are in full-time, part-time or temporary employment.
Moving jobs regularly means you could have money sat in frozen pension pots. Consolidating these pensions could give you more money to rely on in retirement.