Where Will Your Pension Fund End Up?

‘Former ministers warn over £500m dormant pensions grab’ was one of the standout financial headlines of the last couple of weeks, with former Pensions Ministers Baroness Altmann and Sir Steve Webb highlighting the Government’s proposal to donate dormant pension funds to charity.

This isn’t a new concept. Currently there is a scheme that releases bank and building society savings to good causes if the accounts have been untouched for 15 years. However this new proposal would expand the scheme to dormant pension and insurance assets.

The Government has stressed that assets would only be transferred to the scheme after ‘appropriate efforts’ have been made to ensure they are reunited with the correct owner.  To my mind this poses a potentially wider question with pensions.

It is relatively common for people to accrue a number of pension pots of differing sizes throughout their working lives, given that there are now few ‘jobs for life’. It’s more common than ever to have several pension pots, as the work place has become more transient and with many people leaving employment to become self employed and/or to run their own business.

So, how many pensions exist in previous names or at former addresses? Add to this mix the introduction of Stakeholder pensions, the decline of final salary schemes, old ‘paid up’ personal pensions and the now mandatory ‘automatic-enrolment’ schemes and it’s easy to lose track of a pension and for it to be considered dormant.

The overall concept of dormant money being passed to charitable causes is admirable of course, but it’s no secret that we are generally living longer, spending more and that our state benefit system is struggling to keep pace with demand, which makes it more important than ever to make sure that you stay on top of your own pension provision.

Track down your policies, review them with a professional advisor at least annually and ensure the provider has all of your up to date details.

Importantly, once you have tracked down your pensions make sure that your death benefit nomination form is up to date. This is essentially like a mini Will or trust document that applies only to your pension and since the introduction of the pensions freedoms in April 2015, the rules surrounding them have changed as have the implications for not completing them.

Once you have completed the nomination to ensure your money is left to whom you wish you have peace of mind, but it is important to seek professional advice in doing so as there are planning opportunities, particularly for those who envisage that they will pass on some or all of their pension funds.

The Financial Times article of 19th February  2018 states that the Government expects £400 - £500m of dormant pension funds to be available now, with a further £40-50m per annum thereafter.  So to avoid your old pensions potentially becoming a charitable donation speak to your financial adviser.

For more information or advice regarding dormant pension, get in touch with Justin

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