Sorting your pension pots 🍯

Sorting your pension pots 🍯

Part 1 of the Pension Series

In this series, I want to tell you about my personal experience as well as providing you with some key tips to manage your work place or personal pension better and make the most out of it.

It will likely be your biggest long term investment, so it’s worth prioritising this. Your money is usually ‘locked in’ for a long time, that it’s never too late to make changes and see the benefit.

In this post I want to cover pension pots specifically - how you can sort them out and what this could mean for you in the future.

Back in my 20’s I can honestly say I didn’t care about my pension or retirement - it just seemed too far away. At one point I even stopped contributing into my work pension not understanding the future effects it could have 🤦 Something I regret doing, but it’s a good lesson to learn.

I didn’t track my pensions either as I lost the log in details through moving. After working for a few companies I have ended up with random pension pots with different pension providers. How can you track your money, especially if it’s all over the place and you have no visibility of it…?

No chance 🙅‍♀️

It doesn’t help that the current UK work place pension auto enrolment system is not easy to navigate and is still fairly new to us (only been around for 11 years). With every new job employees are likely to have a new pension provider set up by their company resulting in quite a few pension pots over the years of employment.

As people change jobs, it’s easy to forget these pots and do nothing about them. No wonder why there are billions of pounds in ‘lost’ pensions.

The government has started looking into potentially reforming the auto enrolment and allowing employees to choose the pension provider themselves rather than that being chosen by their employer. This could really encourage people to save more and be more involved in their pensions.

After reading a few books and listening to podcasts on personal finance, I finally got it - I am missing out on not being actively involved in managing my own pension and this could cost me tens of thousands of pounds later down the line.

💡I had to take action on this and you can do it too.

One simple change you can make

The main objective of combining pension pots is to be able to view your pension in one place and have a better understanding of its value and how the pension investment is performing over the years.

This makes it ten times easier to manage it and it can save you considerable amount of money over the long term.

Here’s what you should do.

1. Locate all the different pensions and details. If you have no idea who the pension provider was at a particular work place, you can use the government’s pension finder service here.

2. Find log in details and account reference numbers for each pension. This could be on your old emails or statements. If not, you can also ring up the pension provider to recover your details.

3. Before moving your pots you do want to check if you have any benefits attached to those pension pots or any fees associated with moving pensions (I didn't, so it was pretty straight forward).

4. Once you have all of this information you can look at transferring your old pots to your current pension provider. You should be able to make this change online.

5. Alternatively, you can move those pensions somewhere else. For example, I did transfer mine to the Vanguard platform for better investment options and lower fees.

The next step would be to look at the funds your pension is invested in and whether this is suitable for you. Often work place pensions are invested in default funds, which have low risk/low return profile and doesn’t suit younger people, who have decades before they can access their pension.

I will cover this topic in more detail in another post in this Pension Series.

My weekly recommendation

Big fan of the Money with Katie Show!

Last week I came across this episode ‘How Marriage Legally Changes Your Financial Rights’ and found it particularly interesting. I’m not married myself, but found there were things we could all learn from this episode, especially how debt in marriage is seen by the law.

Katie mostly covers the US state laws, however, there are helpful insights we can all take away.

I think it’s really important to protect yourself and understand the full extent of what you are committing to, especially when it comes to the big life decisions.

Hope you enjoy reading and if you have any questions or want more information about anything personal finance related, please reach out.

I have also set up Instagram and Twitter for Money Blues last week, so feel free to give them a follow for more instant tips and insights.

If you missed the first newsletter, you can check it out below.

Until next time 🤸‍♀️

Lina at Money Blues