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How to take control of your workplace pension

The average number of jobs over the course of a person’s career is 12. This means that, for most people, multiple companies will have handled your workplace pension at different points between when you start work and when you finish. These will, inevitably, be split across multiple providers. 

Some 62% of UK adults have multiple pension pots, according to the Pensions Policy Institute. Of these, 21% have reported losing track of at least one of them – the potential value of all these lost pension pots is around £19.4 billion. 

So, what does this mean for those relying on workplace pensions to save for retirement and reach their dream lifestyle? It might mean that consolidation is the best option. 

How workplace pensions work

Put simply, a workplace pension will deduct a portion of your salary and put it directly into a pension plan. In many cases, employers will also make contributions, often matching those of the employee. Since 2012, auto-enrolment into these schemes has been the default for anyone working full time. 

Most people will be given a relatively low-risk portfolio with the idea of growing the pension pot steadily over time. This can, however, lead to people missing out on potential returns that their pension pot isn’t set up to chase – particularly those with more years before retirement. 

Consolidation can make life easier

So, you might have multiple pension pots and you might even be unsure of exactly where all your pension savings are kept. You can, however, take control of your workplace pension by consolidating it into a single, manageable account. 

It’s easy to transfer and having all your funds in one place can be a boost for transparency and manageability. Transferring is often as easy as filling in a few details and providers like Moneyfarm take care of the rest.

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There are some benefits to workplace pension schemes to bear in mind, like employer contributions. Savers should evaluate their position before making any switch, especially from a scheme with your existing employer. Whilst we do accept employer contributions, not all employers will continue to add their contributions away from their default scheme. 

When people transfer, we ask a few important questions about their financial situation and their long-term goals. Using this information, we pair the investor with a portfolio that suits them. Alternatively, existing clients can set up a pension with Moneyfarm in just a few clicks. 

It’s more than just a piggy bank

That leads us to the important topic of performance. This becomes relevant once you start viewing your workplace pension as an investment for the future, rather than a piggy bank. You’re not putting money away and hoping it grows. You can actively improve how it performs. 

Younger people can, generally, afford to take on more risks. With longer before retirement, their pot has more time to ride out any dips. So why not take control of your retirement, as you could be missing out on potential returns by sticking with a lower-risk option. 

However, this does come down to your circumstances. You may find that your situation calls for a relatively aggressive portfolio, or you may find that you’re fine with a lower risk option. 

So, for a no-obligation chat with one of our investment consultants about your long-term financial future, feel free to get in touch. 

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