The introduction of auto-enrolment in 2012 means that employees will now accrue a new pension pot in every permanent job role.
Of course, AE was an admirable policy to help people save for retirement; the problem is that, by automating the process, many employees choose not to think any further about their pension savings.
What is more, it gives a false sense of security that whatever they are saving through AE is sufficient for retirement. “Out of sight, out of mind”, you could say.
So, people are building up multiple pension pots throughout their careers without keeping a firm handle on what is saved and where. And, unfortunately, it is difficult for an individual to track down their lost pensions.
Currently, the government offers a pension tracker service to help adults discover lost pensions. However, the process is time-consuming and fiddly.
Indeed, the government’s pension tracker only tells users the name of their pension provider and its contact details – so it is left up to the user to find out other important details.
The government has also invested heavily in the development of a pension dashboard, which promises to help savers track down their lost pensions and help them view all their information in one place.
While a promising endeavour, the dashboard has experienced may delays and is currently scheduled to launch in 2023.
Yes, it has the potential to transform the way people engage with their pensions, but industry bodies have understandably labelled the government as having been “worryingly slow” in its progress to date.
Government services aside, there are pension providers that will conduct a more thorough pension hunting service, where an individual can find out the total sums of each lost pension pot.
However, these services are not impartial, and only usually allow people to find out the value of their pension pot once they have agreed to transfer all the located funds to the said provider.
This situation is not ideal – and transferring all funds to one specific provider might not necessarily be in a person’s best interest, so professional help would be imperative.
Enter financial advisers, who have a key role to play in guiding clients through this complex, muddy process.
As stated, the goal of any adviser is to help the client secure the best possible financial outcome. However, this is a near-impossible task if they do not have access to all their client’s pension information.
Pensions can be complicated, and if a client is left to gather the information themselves, it is highly likely that some key details may be missed.