€500m of pensions going unclaimed
Barry Walsh Financial Services
When you were aged in your 20s and 30s, chances are you paid little heed to the workplace pension you were leaving behind when you switched jobs or moved abroad for work.
The single pension pot that came with a job-for-life is fast becoming a relic, with job hopping becoming more frequent.
By 2022, just 35pc of employees in Ireland had been in the same job for 10 years or more.
Small wonder, then, that workers are losing track of the multiple occupational pension pots they’ve contribute to during their careers.
If you switched jobs a few times or changed your surname after getting married or changed address and did not notify previous employers, then it is going to be difficult for a previous pension provider to locate you.
Often “pensions are linked to a work email address and when the member leaves, they lose access to that email.” Indeed, there is an estimated €500m worth of pension benefits that have been left unclaimed in Ireland.
But you could be forgoing a valuable asset if you do not make an effort to chase up any pension pots from previous jobs.
“People forget about pensions worth tens of thousands of euros,” says Barry Walsh, who is managing director of Barry Walsh Financial services Limited and is a qualified financial adviser.
Tracing a forgotten pension can prove time-consuming and frustrating. But if you follow these five steps to track down a pension pot it could make all the difference between a cash-strapped retirement and a comfortable one.
When you leave a job but keep an entitlement to future pension benefits, you become what is known as a “deferred member.” But if the scheme’s trustees do not have your contact details, they will not be able to send you information on your benefits or your pension’s performance, so it is in your interest to find their details.
Unless you are a minimalist who does not keep any paperwork in pursuit of a clutter-free home, you will probably find clues to your old pension in a kitchen drawer or a box in the attic. The name of a former pension provider might be on an old annual benefits statement they sent you, a payslip, an employment contract, or in an old email account.
Lost paperwork is the main reason people lose track of their occupational pension, McDonnell says. “I always advise clients to keep a folder for pensions and put everything into it,” he says. “As technology progresses, it’s now a lot easier to find the information as many pension providers use online portals or apps for their pension schemes.”
If you do find the name of the pension trustee, contact them to ask if they currently manage your pension. To locate your missing policy, they might request your date of birth, your current address, and your Personal Public Service (PPS) number.
If they do not manage your pension, it is possible your policy was transferred to another provider through, for instance, a merger. The provider should be able to tell you which company the pension scheme was transferred to.
Even if your benefits were transferred to another scheme, you are entitled to a “preserved benefit” — a pension you get when you hit the scheme’s normal retirement age — if you put in at least two years’ service with your employer.
If your forgotten pension is abroad, you will need that country’s equivalent to a PPS number, such as a national insurance number in the UK. Any old addresses in that country and details of the companies at which you worked can help you locate your identity number.
If you do not have any pension paperwork, then contact your old employer’s HR department; it should be able to provide you with the name of the pension provider that currently manages your scheme and your policy number or they will pass on your contact details so the trustee can contact you instead.
The task becomes trickier if the company you once worked for has gone out of business. If you are still in touch with any former colleagues, ask if they remember the name of the company’s pension provider or know what happened to the scheme. If you do not have contact details for an ex-colleague, connect with them on LinkedIn.
Even company directors’ names can be a great place to start to help track down an old scheme” in the Companies Registration Office.
Even small contributions to a pension can grow over time into a substantial lump sum.
If you are still hitting a brick wall, contact the Pensions Authority, the regulatory body for occupational pensions. The regulator keeps a register of company pension schemes and trustees are obliged to register the schemes with the Pensions Authority.
“Trustees have a legal duty to do their best to try to track down the beneficiaries of a pension scheme,” Walsh says. “If the company has gone out of business, the scheme would need to wind up and the trustees would need to transfer the members to Personal Retirement Bonds (PRBs) unless instructed by the members to do otherwise.”
When you do a search online for “pension tracing,” there are myriad private companies advertising commercial tracing ¬services.
But any qualified financial adviser should be able to help you track down a forgotten pension, Walsh says.
An adviser will ask you to sign a “letter of authority” that will give them permission to access information on your behalf from the country’s pension providers, Walsh says.
“The providers will tell us what pension our client has with them, and we ask what fees are being charged and what the performance has been like,” he says. “They have to provide us with all that information.” If your old pension is in another country, you may need to hire a specialist pension adviser to help you track it down. They should be able to use your information to search databases and financial records to identify any pension pots in your name.
Hunting down an old pension may sound like a lot of effort, but it is worth it.
“Even small contributions [to a pension] can grow over time and become everything from a substantial lump sum to clear a mortgage to paying for a holiday,” he says.
Once you have located all your old pension pots, you will have several options on what to do with them, depending on factors such as your age and financial circumstances. An independent financial adviser will help you choose the best option for you.
“Most people like consolidating their pension pots so that when it comes to investing and eventually accessing the benefits at retirement, it’s all in one place,” Walsh says. “Also, it can be cheaper to pay one fee than to pay multiple fees for numerous pension pots.” You could also leave your pension where it is and draw it down when you hit the scheme’s retirement age.
Even though you and your employer stopped contributing to the pension after you left that job, a defined contribution pension will still have been invested and you should have benefited from the magic that is compound interest over the years.
“If you’re happy with the investment performance and costs overall of previous pensions, there is nothing stopping you leaving them separate and merging them later,” Walsh says.
If you are still working and you are keen on keeping all your pensions in one pot, you may be able to transfer your accumulated pension assets into your current employer’s pension scheme, if the scheme allows such transfers, Walsh says.
You could have the funds transferred into a PRB – otherwise known as a buy-out bond. This is essentially a policy for your pension savings that gives you direct control over how your pension is invested.
“One of the beauties of having an old pension is that you can transfer it to a PRB and access it from the age of 50, if you need to,” Moore says. “If you have multiple small pensions and have them in a series of buyout bonds, you could take up to 25pc out of each one tax-free at different times of your life.” However, dipping into your pension pot before retirement age may not suit everyone, as it prevents the funds from achieving their full potential for tax-free growth.
Another option is to transfer your old pension benefits to a personal retirement savings account (PRSA), though rules and restrictions can apply, says Barry Walsh, director of Barry Walsh Financial Services Limited, one of the leading pension advisors in Waterford (www.bwfs.ie).
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