Financial wellbeing and retirement specialist, WEALTH at work, is urging employers to help staff track down lost pension pots and take control of their retirement savings – particularly old workplace pensions that may have been forgotten.

The challenge of managing multiple pensions now affects most UK workers. Research conducted by WEALTH at work amongst 2,000 UK employees with a defined contribution pension found that almost two-thirds (62%) have more than one pension pot, while one in 20 (5%) are unsure how many pensions they have.

The roll-out of workplace pension auto-enrolment began in 2012 and has led to millions more people accumulating multiple pension pots as they move between employers. The issue is being compounded by a widespread lack of consumer awareness and engagement with pension savings, which over time can lead to people losing touch with what they have.

Jonathan Watts-Lay, Director, WEALTH at work, comments: “Pension pot proliferation is an issue that now affects most UK workers as they accumulate pensions with different employers over the course of their working life. However, if details are not kept up to date, it can be easy to lose sight of what has been saved. Taking a few practical steps can help people to tackle this growing problem. It could make a significant difference to future retirement plans so employees should take the time to track down any lost pensions.”

Five steps to help locate lost pensions:

1. Build a pension timeline. Compile a list of previous employers to help identify how many pensions you might have. To do this, revisit old documents such as payslips, pension statements or letters, emails, employment contracts, P45s, P60s and CVs. While documents like P45s and P60s can help you remember when and where you worked, pension statements, letters and emails are more likely to contain pension scheme names or provider details.

2. Contact previous employers. HR or payroll teams should be able to confirm pension provider and contact details for the scheme at the time you worked there.

3. If the pension provider is unknown then another option is to use the government’s pension tracing service. This can help to identify contact details for workplace and personal pension schemes: www.gov.uk/find-pension-contact-details.

4. Once the provider is found, contact them and request an up-to-date pension statement to understand current value, charges, investment details, retirement options and whether there are any guarantees or penalties attached to the pension.

5. Keep details up to date. Save the provider’s contact details, policy number and online log-in information in a secure place and inform pension providers whenever you move home or change email address.

Should employees consider consolidating their pensions?

WEALTH at work’s Jonathan Watts-Lay also provided guidance on pension consolidation, explaining: “Once lost pensions are located, employees may want to consider whether bringing some pensions together into a single pot could make them easier to manage.

“WEALTH at work’s research found that 24% of employees have already consolidated most or all of their pensions, while a further 17% plan to consolidate in the next 12 months and 15% have thought about it but have not acted yet.”

He adds: “Consolidation can help provide a clearer view of retirement savings, but it is not right for everyone. It is particularly important to understand the type of pension involved. Defined benefit pensions, sometimes known as final salary schemes, include valuable guarantees and should not be transferred without very careful consideration. Where a defined benefit transfer value is more than £30,000, regulated financial advice is normally required.”

What risks are there when consolidating pensions?

Jonathan Watts-Lay comments: “Before transferring, employees should check whether they would lose any valuable benefits or face exit fees. These could include guaranteed annuity rates, protected pension ages, enhanced tax-free cash or other scheme-specific benefits. Charges, service levels, investment choice and retirement flexibility should all be considered.”

He continues: “The key is to make an informed decision rather than simply moving everything into one place because it feels easier. For some, consolidation can be helpful; for others, keeping certain pensions separate may be better. This is where clear information, guidance and, where appropriate, regulated investment advice can make a real difference.”

What can employers do to help?

Jonathan Watts-Lay explains: “Employers have an opportunity to move pension engagement beyond annual statements and enrolment communications. By offering financial education, employers can provide their employees with valuable support that helps them to understand the practical considerations involved in managing multiple pension pots.”

He adds: “Support with tracing old pensions, access to a pension consolidation service, understanding the potential benefits and risks of consolidation and setting retirement income goals can form an important part of an effective financial wellbeing strategy. It can help employees make informed decisions about their future and demonstrates an organisation’s commitment to long-term employee wellbeing and financial security.”