Millions of Britons could be sitting on substantial, yet underperforming, retirement savings in forgotten workplace pensions. With individuals typically changing jobs several times throughout their careers, it's common to accumulate multiple pension pots from previous employers. Financial experts Maike Currie and Simon Lambert recently highlighted the importance of actively managing these old pensions to ensure they are working as hard as possible for future retirement.
The process of tracking down old pension schemes, often perceived as daunting, has become significantly more accessible with online tools and services. The Pensions Tracing Service, for example, allows individuals to locate contact details for lost pensions. Once identified, the next crucial step involves evaluating their current performance, fees, and investment strategies. Many older schemes might be invested in default funds that are no longer suitable for an individual's current risk profile or long-term financial goals, potentially hindering growth.
Currie and Lambert emphasised that a key decision for many will be whether to consolidate these old pensions into a single, newer scheme or to adjust the investment approach within existing pots. Consolidating can simplify administration, reduce overall fees, and offer a clearer overview of one's total retirement savings. However, it's vital to check for any exit fees or the loss of valuable guaranteed benefits before transferring funds.
For UK households, making these pensions work harder can have a significant economic impact. With inflation rates fluctuating and the Bank of England's current interest rate standing at 4.75% as of 15 July 2026, the real value of stagnant pension funds can erode over time. Actively managing investments to align with market conditions and personal risk tolerance can lead to better returns, potentially offsetting inflationary pressures and contributing to a more comfortable retirement.
Ultimately, the choice between changing investments or moving a pension pot depends on individual circumstances, including age, risk appetite, and the specific terms of the existing schemes. Seeking guidance from a qualified financial adviser is strongly recommended to navigate these complexities and make informed decisions that align with one's long-term financial objectives.