Savers race to find out if they could get a windfall from Britain's £3bn unclaimed pensions pot

By Jo Thornhill

PUBLISHED: 15:09 EST, 12 May 2012 | UPDATED: 02:54 EST, 13 May 2012

Pensions have been hitting the headlines and this has triggered a surge of enquiries from people who want to know the value of their retirement savings, or more pertinently, where they have gone.

Independent advisers, insurers, Government departments and Financial Mail are seeing an increase in calls from anxious savers.

John Greenwood, chief executive of Creechurch Capital, an Isle of Man-based investment manager with offices in Manchester and London, is among firms reporting a big rise in enquiries. ‘A significant number of people are coming to us with no idea of the value of their pensions, or who can’t find them,’ he says.

Pooled funds: Simon Cook needed help to track down his money

In the autumn, when all employees will start to be enrolled automatically in workplace pension schemes, even more questions are likely to be asked.

Human resources company Aon Hewitt estimates one in three employees might contact their firm with questions in the first month of pension deductions. Many pension queries are complex, but there are several basic ways in which savers can get information and simplify affairs.

As companies change their name or cease trading, millions of workers lose track of their pension pots. A staggering £3billion lies in unclaimed occupational and personal pension funds.

How to find your lost pension

The Pension Tracing Service, which is free and run by the Government, can help you find a pension you have lost track of, even if you don’t have any paperwork or the contact details of the provider or old employer.

More than 350,000 have used the service since it was set up in 2005 and claims result in a weekly pension of £16 on average or a £1,900 lump sum.

Gather any information you have about your old employer, including names it may have been known by in the past. Also make a note of when you were paying into the scheme. The Pension Tracing Service will then use this to compare your details against the 200,000 plans on its database.

It should be able to hand your details over to the scheme’s administrator. You contact it to ask for your pension details, or for the pension to be paid, depending on your age.

The Pension Tracing Service is available through direct.gov.uk, where there is also a downloadable application form. Or call 0845 600 2537.

Be wary, a number of companies have sprung up offering to find lost pensions, savings, Premium Bonds and other assets for a fee.

Many use official-sounding names in the hope of tricking users into thinking they are backed by the Government. But there is no need to pay to trace lost pensions or savings. As well as the Pension Tracing Service, the banks and building societies together with National Savings and Investments offer a free tracing service for lost savings accounts at mylostaccount.org.uk

I've worked for five companies, in three countries

Like many workers who have changed jobs as they have climbed the career ladder, Simon Cook, 42, had lost track of a range of company pension schemes from old employers. When Simon, a bond trader for an investment bank in the City of London, approached Creechurch Capital to help him locate his lost savings, he had six work pension schemes and two personal pensions.

But as well as help in tracing them Simon also wanted to pool all the cash into one self-invested personal pension – a Sipp – to give him a clearer picture of his retirement savings.

A Sipp can suit some investors who want to have full control over how their cash is invested and also when and how much they invest, subject to certain limits.

These plans have the same tax benefits but tend to be more flexible than traditional pension schemes, allowing investment in a range of different assets. However, the annual charges imposed by providers tend to be higher than those on traditional personal pensions.

‘I’ve worked for five banks and in three different countries. I’ve also moved house seven times,’ says Simon, who lives with his wife Paola and their two children, Peter, 8, and Emma, 6, in north London.

‘It means my paperwork wasn’t in good order. But Creechurch tracked my pension pots down quickly, even with the scant information I had.

‘They then got transfer values from the schemes and pooled my funds so that I could hold them all in one place within the Sipp.’

Some of Simon’s old company pensions were final salary or defined benefit schemes. These are usually much more generous than money purchase or defined contribution plans.

With a final salary scheme, the benefits are linked to the wage you end up on at the company together with length of service. They sometimes also allow more than 25 per cent to be taken as a tax-free lump sum at retirement age. In contrast, money purchase schemes are invested in the stock market so there is no guarantee of what the final retirement income will be.

Tom McPhail, the head of pensions research at Bristol-based independent financial adviser Hargreaves Lansdown, says transferring cash out of a defined benefit scheme is rarely the best option because these valuable benefits are lost. He recommends investors seek advice before consolidating such plans.

‘Start with the assumption that you are better off staying put in the final salary plan,’ he says. ‘Watch out for transfer penalties and any guarantees you might be giving up.’

Simon says he knew of the risks in cashing in his final salary schemes, but says he made an informed decision and is happy he has done the right thing for his needs.

‘The value and benefits in the final salary schemes was not sufficient to warrant me leaving them where they were,’ he says.

‘On balance it was more important to have all the funds in one place and for me to have control over how they are invested. It is also much easier having all the administration coming from one place. It means that I shouldn’t lose track of my pension again.’