If you've worked for multiple employers over the years, chances are you've accumulated a few pensions along the way. It’s estimated that most people will change jobs 8 times before retirement, which can mean quite a few pensions to keep a track of. It’s not uncommon for individuals to lose track of their pension benefits or struggle to keep their retirement savings organised especially during their early career when retirement seems like a long way away.
An easy way to keep things up to date, in one place and maximise your benefits is by transferring old employment pensions into a Personal Retirement Savings Account (PRSA).We’ll look at the process for this below as well as providing some practical tips on tracking down those “lost” pensions.
What is a PRSA?
A Personal Retirement Savings Account (PRSA) is a personally owned pension that lets you save for retirement on your own terms. You can contribute to it whenever you want and stop making contributions at any time.It’s designed to be flexible and portable, allowing you to continue contributing even if you change jobs or become self-employed. Unlike traditional pension schemes tied to an employer, a PRSA gives you greater control over your retirement savings and investment choices.
Why transfer old employment pensions into a PRSA?
When you've worked for multiple employers, you may have different pension pots from each job. This can lead to a fragmented retirement plan that's harder to manage, and sometimes these old pensions can even be forgotten (“lost”). Here are some of the benefits of transferring old pensions into a PRSA:
· Tax relief on PRSAcontributions
· Any investment growth on your PRSA is tax-free
· Flexibility – you decide how much to contribute to your PRSA
· Take your PRSA with you when you move jobs
· Stop and restart PRSA contributions at no extra cost
· Additional Voluntary Contributions (AVCs)
How to transfer your pensions into a PRSA
It’s relatively easy to transfer your old pensions into a PRSA. The first thing is to review your pension benefits and track down details on all the pension schemes you have been part of. Then it’s best to get the help of a Financial Broker to assess whether transferring these into a PRSA is the best option for you. If it is, then they can help you set up your new PRSA and assist you with the transfer details. While this process can take some time, it is usually well worth completing to have things for when you do come to retire.
Tracking Down “Lost”Pensions
The most time-consuming part of the process can be tracking down any pensions with previous employees. As you move from job to job, it’s easy to lose track of pensions. You may have moved address, updated your email, lost passwords for online access or the employer may have closed. However, finding these pensions is crucial to maximizing your retirement savings. Here are some practical tips for tracking down "lost" pensions:
1. Check Old Documents: If you still have payslips, pension statements, or contracts from previous jobs, these may contain information about your pension scheme and the provider which will give you an initial source to contact.
2. Contact Former Employers: Get in touch with the HR department of your previous employers to inquire about any pension contributions made during your time with them. Again, they should be able to give you details on who manages the scheme and who to contact.
3. Trace your employment history: Your PPSN No. can help to trace your employment history, which could assist in tracking down old employments and pensions.
4. Get help: As well as helping you to decide what the best options are you retire, a Financial Broker can also help you to track your previous pension benefits.
Next Steps
Transferring old employment pensions (or“lost” pensions) into a PRSA is an excellent way to simplify and gain control over your retirement savings. It can also potentially result in savings by reducing fees and allowing for greater investment flexibility. Tracking down any lost pensions ensures that none of your hard-earned retirement savings go unclaimed. You need to be proactive about your retirement planning and take steps to put a robust and easy-to-manage plan in place. At Searing Point Wealth Management, we’d be delighted to help you to take control of your retirement planning and work with you to build, manage and grow the optimum pension solution for you. Just contact us to arrange a suitable appointment.
