Multiple Pensions Consolidation – A Case Study

Multiple PensionsI was introduced to Mrs S and her husband with regard to an issue with their multiple pensions by the Federation of Small Business – I am the local financial services service provider for them in Hertfordshire.

Mr S had a good final salary pension plan with a previous employer and was very happy with the annual rate of increase of benefit. There was no need for us try to better its guaranteed benefits.

Mrs S, though, was a different story. She had moved from job to job over the last 20 years before settling down to bring up her two children. At our first meeting we went through her employment history, detailing dates of service and equally importantly her home address at that time.

Eventually we ended up with multiple pensions from a list of her 8 previous employers, all of which had pension schemes in place, but Mrs S couldn’t remember whether she joined the scheme, or whether, when she left employment, she had a refund of her contributions less tax.

It took FixMyPension 3 months to track down all the employers, their employee benefit consultants and/or pension providers. This is a typical length of time because employers are taken over, merge or simply cease to trade. Companies change employee pension benefit consultants when contracts expire or are renegotiated and pension companies have also undergone a period of consolidation.

As a result of our investigations we discovered that of the multiple pensions she had, Mrs S had retained benefits of one kind or another with 5 schemes related to her previous employment. The other 3 had either not enrolled her, or given her a refund.

I presented my findings to Mr and Mrs S. Before I revealed figures I asked them both how much money they thought Mrs S had in pensions funds. Mr suggested £30,000 and Mrs estimated £20,000.

As it turned out, one of the pension funds had performed particularly well and the total amount in Mrs S’s pension funds amounted to £145,000, much more than she ever expected.

So this £145,000 was now split between 5 different pension funds, all invested differently in differing risk funds and all producing projected income figures at different times of the year, depending when the plan anniversary was.

Mrs S had a level of income she wanted at retirement, but had no way of ascertaining whether she was now on track or way off. She didn’t know what level of performance was required from her pension funds to attain her desired level of income. She didn’t even know what the performance of her pensions had been over the last 10 years – she was flying blind!

FixMyPension went through a process of analysing charges and performance of each of her pension funds. We recommended that they could be consolidated into one larger pension and invested according to her attitude to risk and targeted to her required retirement income. Suddenly the blindfold has been removed and she is no longer concerned about her retirement prospects.

If you have collected a number of pensions over the years and are currently unsure of their values, or even where they are, let FixMyPension review them for you. Multiple pensions and pension consolidation are our specialty.

By Andrew Colyer-Worsell

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