A CHARITY shop worker is £5,000 better off in retirement after discovering cash she had forgotten about through a “life-changing” app.
Many of delay putting money aside for our pensions until later life which is damaging our retirement savings, research has shown.
Only around one quarter of millennials – those aged roughly 28 to 43 years old – have thought much about their retirement planning, according to a study by Standard Life.
But waiting too long could see you miss out on significant savings for their later years.
Research by pension consultancy Barnett Waddingham found young people who put off saving into a pension until middle age could lose out on as much as £665,000 by retirement age.
That’s why Katherine Brant, now 31, decided to take action and get her pension planning in order three years ago.
The charity shop assistant manager, from Lincoln, realised she had no idea where all her old pensions were and worried the savings she have put aside in earlier jobs could get lost for good.
“It was during the pandemic that I decided I needed to get on top of my pensions,” she said.
“I only had a very basic understanding of how they worked, but I knew I must have had old pots knocking around somewhere that I’d basically lost.”
Katherine went online to search for how to find old pensions and found an app called Moneybox, which said it could help her find all her pots and put them into one place.
She had no idea what to expect, but signed up and handed over her details.
However, she now describes this decision as “life-changing” after the app helped her find a £2,000 pension she had forgotten about, which has now grown to give her an extra £5,000 towards retirement.
And she still has decades before she retires to grow her savings even more.
“Finding this extra money feels life-changing, I had no idea it was even there,” she said.
MISSING PENSIONS PROBLEM
Millions of workers are estimated to have old pension pots they’ve forgotten about.
You need to keep track of your paperwork for your pensions to be able to access them – but many workers aren’t doing this.
Around 4.8million pots are currently believed to be “missing” in the UK, according to provider PensionBee, with the average employee losing track of a pot worth £10,000.
Brian Byrnes, head of personal finance at Moneybox, explained:“Most people working today will have multiple jobs over the course of their lifetime and, in most cases, a new job means a new pension and the old one is left behind.
“This can result in having multiple scattered pension pots, which are easy to lose track of.
“Combining multiple pensions into one easy-to-manage pot can make managing them much easier and you’re far less likely to lose track of old pensions over time.
“It could also mean paying less in fees and having more control over where your money is invested.”
How do apps track down your old pensions?
Moneybox is one of several apps which can help you can track down and combine your old pensions, as well as help you set goals to achieve your desired retirement pot.
Be aware these services may charge you for moving your pensions, and check to make sure you wouldn’t be giving up any valuable benefits by switching out of one of your old schemes.
“I just filled out a few details and Moneybox did all the rest – they tracked down old pensions and asked me if I wanted to move it,” Katherine said.
The Government also has a pension tracing service, while other pension providers have their own services.
We revealed last month how one retiree found an extra £100,000 in lost pensions he had accumulated over his career with pension tracing app Penny.
Moneybox was able to track down several of Katherine’s lost pensions which collectively held just over £2,000.
She has now merged this cash with her current £2,500 pension and has now made around £5,000 extra by investing it using Moneybox’s pension investing feature.
Your pension is invested with the aim of growing it over time, and usually your pension provider will invest it on your behalf – but you can usually change your investments yourself if you want to.
Investing: know the risks
INVESTING is a risky business.
It’s not a guaranteed way to make money. You cash can always go up as well as down.
Make sure you know the risks and can afford to lose the money.
Before investing you should check the Financial Conduct Authority’s register and check its list of firms to avoid.
Another feature Katherine has discovered through Moneybox is its Lifetime ISA, as well as other savings accounts.
Her long-term goal is to buy a house in Belfast (Scotland).
She’s now opened a Moneybox LISA, a 92-day notice account, a stocks & shares account, a rewards savings account and a simple saver which she’s using to build a deposit.
She’s has now saved a total of £20,000.
The savvy saver says her attitude towards money and pensions has completely changed since discovering Moneybox and her old pensions.
“I’ve always been a saver, but now I manage my money obsessively,” she said.
“I’ve become more frugal and I know where all of my money is going each month which has boosted my savings.
“I did have Help to Buy ISA with Barclays and was putting away about £150 a month, but it was stagnant and I wasn’t seeing much rewards and found the process quite off-putting compared to the Moneybox one,” she said.
How else to boost your pension
THERE'S are a couple other ways to boost your savings pot in later life, according to two experts who spoke to The Sun...
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said one easy way of boosting your state pension pot is by deferring it.
This is because you don’t receive your state pension automatically and have to actively claim it.
But for each year you decide to not claim it, the Government boosts your payments.
Helen explained: “Under the new state pension system for every year you defer you boost your state pension by around 5.8% per year.
“This works out as an extra £12.82 per week. However, make sure that in doing so you aren’t inadvertently pushing yourself into a higher tax bracket when you do come to claim state pension or pushing yourself out of eligibility for benefits you would otherwise have received.”
Becky O’Connor, from PensionBee, said you should also claim child benefit to boost your state pension, even if you’re not working.
This is because claiming child benefit gives you NI years.
Becky explained: “While you usually get National Insurance contributions by paying taxes on your wages, when you claim child benefit, you’ll be automatically credited with National Insurance contributions until your youngest child is 12, even if you’re not earning.
“Even if you don’t think you’re eligible for child benefit because either you or your partner earns over the £60,000 tax-free limit, it’s important to claim it to avoid missing out on National Insurance contributions and putting yourself at a disadvantage in retirement.”
“If I had left the money where it was I would only have around £6,000.
“But since moving to Moneybox’s LISA, I’ve been getting the government bonus and interest my pot has grown to £12,000.”
“It’s really exciting to find out you have extra money, but I’m so glad I found it when I did as it allowed me to manage it myself and turn it into an even bigger pot for my future.”
Katherine believes everyone should be paying close attention to their pensions, especially young people.
“I tell all my colleagues to keep an eye on their pensions,” she said.
“We definitely need to change the narrative that a pension is something you worry about later on in life.”
PENSION DASHBOARD INCOMING
A new tool is currently being developed to help savers bring together all their pensions, which should help stop pension pots getting lost for good.
The new tool, known as the pensions dashboard, was first mentioned in 2016 but has been beleaguered by tech problems.
However, it’s finally due to go live by 2025.
The Government first announced plans to tackle this in the 2016 Budget and set up the Pensions Dashboard Programme (PDP) to work with providers.
Andrew Tully, technical service director at pension firm Nucleus,explained: “Pensions dashboards will give people an overview of all their pensions and how much income they will provide in retirement.
“But, having the information is only the beginning. We need to help pension savers understand that information and know what they can do next, and how.”
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