Lost pensions – where people find it hard to trace pensions they may have paid into over their working life – is a problem that should not be overlooked. In Britain, it is estimated that over €3.66bn is sitting in lost pension accounts.
With today's workforce being much more mobile, it can be difficult to locate exactly where various bits of pension savings are – and this issue is further exacerbated for those who have lived and worked abroad. These forgotten or misplaced pension funds can result in people coming to retirement and missing out on pension savings that could make a big difference to their standard of living.
While most people should be able to remember the jobs they had throughout the course of their working life, they may not remember who looked after the pension scheme they were in. Their employer may also have merged or closed down, so it can be difficult to know where to even start looking.
One of the most common mistakes people make is believing that tracing a pension from a previous employer is simply not worth the effort. This can often be a costly mistake to make. If you and your employer have paid into a pension for even just a few years, depending on when that pension was started, significant sums may have accrued.
Here are some steps you can take to ensure you don't lose out on any pension savings accumulated over your working life.
* It is almost always in your best interest to join an employer's pension scheme as the employer will be paying into it. Once you have been in it for two years, you have a legal entitlement to the value of it. The fact that you don't see yourself with that particular employer until retirement age does not mean you can't benefit.
* Try to hold on to some of the pension documentation as that will have contact details that should help if you need to trace your pension in the future. Discarding communication from a pension administrator can make the effort of tracking it down much greater.
* Make sure whoever administers a pension scheme in which you have been a member has your up-to-date address. Keep a list of companies to notify when you move. Also try to make sure these companies have contact details that are unlikely to change, such as personal email addresses or mobile numbers. Once your pension is due to be paid, the trustees have a legal duty to pay it and will make some efforts to find you. However, that will be difficult if you have moved from the address that they have on file for you – and it will be even more difficult if you are living abroad.
* While you are still employed, you get an annual statement setting out your benefits and the main contact details for the scheme. However, once you leave that employer, you no longer automatically receive that information. You can ask for updates on your pension from the pension scheme administrator and they are obliged to provide these to you. You should do this at regular stages to help plan for retirement.
* You have the right to transfer any past pension benefits you have into your current pension. Talk to your new employer and get independent financial advice, as it doesn't always make financial sense to transfer.
* As you get closer to retirement, think about getting independent financial advice – as the adviser will be able to help you in tracking down past pensions.
* If you are having difficulty working out where your pension is, contact former colleagues or the regulator, the Pensions Authority.
Jerry Moriarty is CEO of the Irish Association of Pension Funds