• February 23, 2016

Mike Skinner wanted to know, “Where is all his money?” He started a new job a year ago and wanted to consolidate all his pension pots from previous employers. He was 53 and looking forward to retiring. Mike had worked for a few different companies in his life. Each offered different pension plans. Mike enrolled in company pension plans that pay in monthly sums, 3 different times with 3 different companies. These plans accumulate the money that people contribute and form ‘pots’ of money.

He did not want to manage several different pots. That’s too time consuming. If he could put all 3 previous pots into this new pot, he would be able to access and manage his retirement money easily. But was it too late? Did some of his hard earned money vanish? Unfortunately, Mike hadn’t kept track of the details of each pot. At 53, with retirement on the horizon, Mike needed to find the 3 pots. In retirement, Mike wanted to play a little golf and take his wife somewhere special once in a while. He needed every penny of his money growing and earning interest.

Two pots were easy to find. But that third pot seemed to have gotten lost in the complicated transactions of banking and insurance industries. He figured he had put about £5,400 into it during the nineties. With decent interest, Mike hoped it was worth even more now … if he could find it. The company that Mike had worked for to contribute that pot didn’t even exist anymore, the pension money should not disappear with the company. Mike decided he better get help from the experts at Pension Tracing Service. It’s a government run service that helps about 100,000 people per year find their pensions. Not even THEY could find a record of where Mike’s pension was.

Mike got creative. He used social media to find a former colleague from that old company. That colleague was in contact with the general manager. He told Mike that Scottish Widows had bought the company’s pensions. Mike was confused but with a little research, discovered that pension schemes can get sold from one company to the next. Employers are supposed to notify their personnel when pensions change companies. But former employees are hard to locate if they don’t update their phone numbers and addresses with former employers. Mike had never even thought about doing that. Mike called Scottish Widows. They had his pot, but he was dismayed to find out it was only worth £1,915. Not even close to what he was hoping for, considering he thought he had contributed more than twice that amount. Watchdog and a pension tracing specialist, Shaun Davis, wanted to know why Mike’s pot was so small.

They searched company records and spoke with independent advisors and contacted more than 20 pension providers. It turns out that when Scottish Widows acquired Mike’s pension, it was only worth £1,339. But that was back in 2005 and Mike’s old company had sold the fund in 1995. What happened between 1995 when the first company sold the fund and 2005 when Scottish Widows bought it? Did his pot plummet in value due to bad investing or was there never £5,400 in it? It remains a mystery. Mike’s story can teach a lesson. If he had kept track of his funds he would have known where it was and what the value was. Letting pension providers know when he moved would have helped too. Mike could have transferred this pot as soon as he saw a drop in value. A different outcome would have enabled him to invest much more into his new pot and provided a nicer lifestyle in retirement.