Ahead of the New Year, experts are sharing what retirees can do to boost their income significantly in the months ahead. One of the many ways older people can do this is by tracking down old and forgotten pension pots. With the cost of living crisis looking set to continue for the foreseeable future, older households can make sizable savings by doing so.
Figures from the Department for Work and Pensions (DWP) show that Britons switch jobs on average 11 times during their careers.
A consequence of this is that individuals acquire a multitude of different pensions to keep on top of.
Currently, the DWP estimates there could be around 1.6 million “lost” pension pots in the UK which are not being accessed.
Each individual retirement pot is worth an average of £13,000 per pot with experts encouraging pensioners to dig out their “old paperwork” to access it.
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Since 2012, workers in Britain have paid into their workplace pensions thanks to the introduction of auto-enrolment.
This policy works out as an opt-out basis for employees which means, unless workers deliberately decide not to save into a pension, their employer must put one in place.
It should be noted that the employer’s obligation to set up a pension pot is subject to certain conditions.
As a result of auto-enrolment, employees within the private sector are now paying over £60billion annually into their pensions. This represents a 50 percent rise from 10 years ago.
While the amount pensioners have saved for their retirement has increased substantially, older Britons must keep track of more pots due to this.
The majority of workers in the UK will have a new pension set up for them with every new employer they start a role with.
Pensioners are being encouraged to consolidate their old and current pension pots together to acquire a sizable savings boost.
Placing them together could make someone’s retirement plans much more manageable, according to experts.
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Laura Suter, the head of personal finance at AJ Bell, shared what the first steps of any retiree needs to be in order to do this.
She explained: “Your first port of call is finding any old paperwork that will tell you where your pension is and how to log-on to see its value and transfer it.
“If you can’t find any documents, you can use the Government’s pension tracking service to find where it is now.
“Tracking down these old pots makes sense for a number of reasons. Firstly, knowing how much you have saved in total will help you work out how much you might need to save in the future to enjoy the retirement you want.”
Furthermore, she also detailed why people should consider combining old retirement pots with current pension funds.
Ms Suter added: “Secondly, once you have located any old defined contribution funds you can consider combining them with your current workplace pension or moving them to a Sipp you can manage online.
“This will make your pension easier to monitor and manage, but also means you could benefit from lower charges, greater investment choice and more flexibility when you decide to access your fund.
“Just double check before you transfer any old pensions whether they have any guarantees attached, as these could be lost if you switch to a new provider.”