Pensions, explained properly

Tracing lost and forgotten pensions

Since auto-enrolment began in 2012, almost every job has come with a workplace pension attached. Change jobs a few times, move house once or twice, and it is remarkably easy to end up with pots you have completely forgotten about. Providers rebrand and merge too, so even if you kept the paperwork, the name on it may no longer exist.

The good news is that lost pensions are nearly always findable. The government runs a free Pension Tracing Service that can point you towards a scheme's administrator if you know the name of your old employer. Old payslips, P60s, joining packs and even rough employment dates all help. It costs nothing to look, and you should never need to pay anyone simply to search for your own money.

When I take on a new client, tracing is often the first job. With your permission I write to providers on your behalf (a letter of authority lets them talk to me), gather the details of every plan, and put the whole picture in one place. It is unglamorous work, but you cannot plan properly around money you cannot see.

Working out what you actually have

Most pensions fall into one of two camps. Defined contribution pensions are pots of money, built up from contributions and investment returns, and what you eventually get depends on what the pot is worth when you come to use it, which can go down as well as up. Defined benefit pensions (often called final salary or career average schemes) promise an income in retirement based on your salary and service, and the scheme carries the investment risk rather than you.

Once you know which type you hold, statements start to make sense. For each plan it is worth pinning down:

• The current value, or for a defined benefit scheme, the income you have built up
• What you are charged each year, because charges vary widely between older and newer plans
• Where the money is invested and whether that still suits you
• What happens to it when you die, and whether your nomination form is up to date
• Any special features, such as guaranteed annuity rates, protected tax-free cash or penalties for transferring out

That last point matters more than people realise. Some older plans, often those set up in the 1980s and 1990s, carry valuable guarantees that modern pensions simply do not offer. You need to know about them before you touch anything.

Combining pensions: when it helps and when it is a mistake

Consolidation, bringing several pensions together into one, is one of the most common things people ask me about, and it is easy to see why. One plan means one statement, one set of charges, one investment approach and far less admin. For plenty of people it genuinely does simplify life.

But it is not automatically the right move, and done carelessly it can be an expensive mistake. Before recommending any transfer I check whether a plan carries guarantees or protections that would be lost, whether there are exit penalties, whether your current employer is still paying in, and how the charges and features of the new plan compare with the old ones. If an old pension has a guaranteed annuity rate or protected tax-free cash, keeping it may well be the sensible course, and I will tell you so.

Defined benefit pensions are a category of their own. If your defined benefit or other safeguarded benefits are worth more than £30,000, the law requires you to take regulated financial advice before transferring. The regulator's starting assumption, which I share, is that keeping a defined benefit pension is usually the right thing to do, because the income it promises is very hard to replace.

Your options at retirement, explained plainly

From the normal minimum pension age (currently 55, rising to 57 in April 2028), a defined contribution pension gives you choices. In plain terms:

• Tax-free cash. You can usually take part of your pension free of tax, normally up to a quarter of the pot, within limits set by HMRC. You do not have to take it all in one go.
• Drawdown. The rest stays invested and you draw an income as and when you choose. It is flexible, but the money remains invested, so its value can fall as well as rise, and if you draw too much too quickly it can run out.
• An annuity. You exchange some or all of your pot for a regular income paid for the rest of your life, however long that turns out to be. It offers certainty, but the decision is usually permanent.

These options can be mixed, phased and revisited over time, and the right blend depends entirely on your circumstances, health, other income and plans. I am deliberately not recommending anything here, because a webpage cannot know your situation. It is also worth knowing that MoneyHelper's Pension Wise service offers free, impartial guidance to people aged 50 and over with defined contribution pensions, and I would always rather you were over-informed than under-informed. Bear in mind that tax treatment depends on your individual circumstances and may change in future.

How my advice and yearly reviews work

Everything starts with a conversation that costs you nothing. The free initial consultation can happen at my office at 42 High Street in Walshaw, at your home if you are local, or by Teams or phone anywhere in the UK. We talk about what you have, what you want retirement to look like, and whether I can genuinely add value. If I cannot, I will say so.

If we go ahead, I gather the details of every pension you hold, analyse the charges, features and any guarantees, and set out my recommendation in writing, in plain English, with the reasoning and the costs made clear before you commit to anything. One thing to be upfront about: my advice is restricted, which means I recommend from a panel of products and providers selected by Quilter rather than from the whole of the market. I would rather explain that plainly than have you find it in the small print. More than 150 clients have taken the time to leave five-star reviews on Google, and I am prouder still of the conversations behind them.

Retirement planning is not a one-off event, so my clients have a proper yearly review. Each year we check whether you are still on track, whether your investments still match your attitude to risk, whether contributions and tax allowances are being used sensibly, and whether life has changed in ways your plan should reflect.

When should you start planning?

The honest answer is that the earlier you start, the more options you tend to have, because there is more time to adjust and mistakes are easier to correct. But I have never told anyone they had left it too late, because there is almost always something worth doing.

As a rough guide: in your 30s and 40s, the priorities are usually contributing consistently and not losing track of old pots as you change jobs. In your 50s, it is worth building a full picture of everything you hold, checking your State Pension forecast on gov.uk, and shaping a realistic retirement date. In the final few years before retirement, the decisions become concrete: how you will draw an income, in what order, and what to do about tax-free cash. And the planning does not stop at retirement, because income needs, markets and tax rules all keep moving.

Wherever you are on that timeline, the most expensive habit is usually putting off the simple step of finding out where you stand.