Some workers are having difficulty finding their retirement plans because they have changed jobs quite frequently or their former employers have changed locations, been bought out by other companies, or have changed their names.
Indeed, like dormant savings accounts, some experts reckon there is a lot of unclaimed money in the pensions system that is simply lost or forgotten about as workers were unaware, they had in it the first place. Some employees may need to go as far back as 40 years to trace lost funds. Experts estimate that there is up to €1bn in unclaimed money lying around in Irish pension schemes.
Although that sounds like a lot, it's still a relatively small proportion (less than 2%) of the €70bn of total pension funds in the Irish market. With a typical worker in Ireland now expected to have anywhere between five and 20 employers before they reach retirement, this problem can only get worse. Normally, it's the smaller funds that are more likely to go missing, so even if 10pc of the over 800,000 private sector pension savers lose their smallest pension pot of, say, €5,000, that still amounts to €400m.
CMCC Financial Solutions have helped a number of clients trace lost pension funds by contacting all possible insurance companies and any known previous employer to see if any missing funds can be identified. We invariably find something; it is amazing what people forget. In our trawl, we also often find forgotten life insurance policies, which sometimes have a value. Pension money is held in trust for savers, who don't lose their entitlement to the money even if they lose track of it.
It can happen quite easily, for example, where workers have left employment with more than two years' service and did not leave up-to-date forwarding addresses, particularly where they emigrated or where the employee left employment in their 20s or 30s and did not appreciate that their funds continued to grow in value. Even though these funds may have started out with small amounts, they can continue to grow, producing potential windfalls when retirement eventually comes around.
Pension schemes here are obliged to make every effort to trace all members of a scheme when their entitlements become due, but the organisation says tracking down people who have not seen entitlements for up to 40 years may be nearly impossible in many cases.
If you can account for all your retirement savings but are not sure what to do next, one of the options you have is to transfer benefits from previous pension schemes into pension contracts of your own choosing, such as buy-out bonds or PRSAs. By doing so, you can keep track of your own pension funds and amalgamate some of them, thus eliminating the need to keep in touch with your former employers.
Article supplied by Conor Murray of CMCC Financial Solutions
