Reginald Smith knew he had a few pensions from previous jobs, but even he was shocked at how many he found when he and his wife Geraldine started digging.
The 64-year-old health and safety professional has 28 pension pots and more are coming out of the woodwork, with the last one installed just two weeks ago.
Since 1978, Reginald has held nearly thirty jobs as a contractor, health and safety manager, consultant and planner for dozens of companies.
But a year before his planned retirement, the grandfather-of-two from Mansfield, Nottinghamshire, faces the daunting task of getting his retirement finances in order.
With the valuable help of his wife Geraldine, 64, a retired financial adviser, the couple have spent the past nine months digging into the nest egg of pensions left behind during his busy career.
Labor of love: Geraldine Smith helped her husband Reginald find the pensions he had built up during his career
They have so far merged more than 18 Reginald pensions into one pot of over £250,000 with PensionBee, an online personal pension provider with its own investments.
“It was not easy to find all the policy numbers and names of the pension companies,” he says. ‘Luckily my wife has been very helpful and we found £5,000 here or £10,000 there.’
From Rolls-Royce to dog food companies, mining companies, universities, energy supplier EDF Energy and chocolatier Thorntons, Reginald has worked in all sectors and collected pensions at every job.
He says the large number of jobs is due in large part to the nature of his work. Some moves were his choice, others were beyond his control in the event of dismissal. He has looked for a headhunter or changed jobs several times to improve his work-life balance and spend more time with his wife, son and the children in their care.
He says, “I would spend two years here and there. I’ve always been good at putting money away, but I never thought about how many different pots of money I would end up with.’
However, savers like Reginald could soon be able to keep just one pension pot for their entire working lives, according to plans announced by the Chancellor in November. Last week, Jeremy Hunt confirmed during his budget that the government is continuing to implement major reforms to the pensions market.
The proposals would allow workers to continue paying into their former employer’s pension scheme, rather than opening a new account every time they change jobs.
Currently, anyone who works in the private sector and changes jobs is automatically enrolled in the new employer’s pension scheme. This means that most workers will retire and spread their savings across a dozen pension pots, as workers hold an average of twelve jobs throughout their careers.
Holding multiple pots can make it difficult for employees to keep track of their total retirement savings. The Chancellor’s reforms would give new employees the right to choose which pension scheme their employer will contribute to as they progress in their careers.
Playing detective: Holding multiple pots can make it difficult for employees to keep track of their total retirement savings
PensionBee’s Rebecca O’Connor said the rule change would be a boon for savers as they would no longer be put into a pension they had not actively chosen.
She says: ‘People in their 20s are increasingly reporting that they will have the same pension by the time they reach 30 as people in older age groups, as it becomes increasingly common to change jobs regularly.
“If you have several small pots, you are more likely to lose track of them if you think they are not very valuable but could have grown significantly over time.”
A staggering £40 billion of unclaimed pension assets are languishing in long-forgotten pots, according to Gretel, an online service that reconnects people with lost and dormant accounts.
Once an account is identified as dormant, the money is transferred to a central fund to be spent on charities through the Big Lottery Fund. But it is still possible to come forward and get reimbursed.
Accounts can be declared dormant if a letter is returned to you from a pension provider stating that you no longer live at the address. This is usually after a period of inactivity, where you haven’t touched money for one to five years.
Reginald has started reducing his hours and plans to fully retire on his 65th birthday next March, when he and Geraldine plan to travel extensively.
In preparation, the couple have sold their £330,000 Victorian home, with a quarter-acre garden and five bedrooms, and downsized into a £178,000 three-bedroom bungalow. They have drawn on their pensions to renovate the building, installing underfloor heating, building walk-in bathrooms and widening doors to make it future-proof.
He says: ‘Now that I have all my pensions in one place it is much easier to use them for this type of expenditure.’
Consolidating pensions can also prevent you from unintentionally paying high fees that some companies levy on old pensions. A small difference in fees can cost tens of thousands of dollars over decades.
Smart saver: Most pension schemes must send you an annual statement
To track down old pensions that you have not kept an eye on, first check whether you have any old paperwork that may contain the name of your pension scheme or details of the scheme’s administrator or administrator.
Most pension schemes require you to be sent an annual statement. If you have not received this, it may be that you have changed your address and have not informed the executor. If you have difficulty finding information, contact the pension provider, your former employer if it was a company pension, or the Pension Tracing Service, a free government service.
You can usually transfer a defined contribution pension at any time before you withdraw money from it upon retirement. This type of pension has become the most common and is a pot of money that you and your employer contribute to and which is normally invested in shares and bonds.
In most cases you can transfer your money to another provider after you start withdrawing money, but check the fine print.
You should also check that you are not giving up valuable benefits by moving out of a scheme, for example a guaranteed annuity or additional death benefits.
If the value of a guaranteed annuity rate or other valuable benefit is more than £30,000, you may need to seek regulated financial advice before transferring the pension. Some schemes charge an exit fee, which penalizes you if you transfer money from them.
Under his wife’s expert guidance, Reginald has kept several valuable defined benefit pensions, including a local government pension and another mining pension, separate from his new pot.
- Do you have more than 20 pension pots? Email jessica.beard@mailonsunday.co.uk
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