The £400m pension treasure hunt

The average UK employee switches jobs 11 times over the course of their career, according to the Department for Work and Pensions. However, over half of us have no idea how to access previous pensions, according to pensions provider Aviva.

That's why the Government set up their Pensions Tracing Service. With over £400m waiting to be claimed from forgotten pensions, here's how to find out if you're due a retirement windfall.

Why lost pensions matter

Pensions definitely fit the saying 'out of sight, out of mind'. At best, pension pots from previous jobs could be languishing on higher charges and in poorly performing funds. At worst, it's money that, should you forget to claim it, is lost forever.

How to track down your pensions
The DWP estimates that there will be 50 million dormant pensions by 2050, containing a staggering £757billion in unclaimed savings!

You'll only have six years to claim any untouched pensions after retirement, so this is something worth doing sooner rather than later. There are three stages to recovering old pots using the Government's improved service:

1. Draw up a list of jobs you've had, using old paperwork (payslips, P60s and employment contracts) to work out if you were paying into a pension
2. Use the Pension Tracing Service to identify who the pension providers were
3. Use their contact details to get in touch, including as much detail as you can (scheme reference numbers, old correspondence addresses, etc).

How to combine pensions

Bringing all your pensions under one roof could mean lower charges and better performance, which can have a serious impact on what's at your disposal in retirement.

Let's crunch the numbers

A 30 year old with £20,000 in a scheme with a 1.5% annual management charge and 4% growth would have £47,464 by the age of 65. If they moved to a scheme with a 0.5% charge and the same 4% rate of growth, they would have £66,672. Bear in mind that returns are never guaranteed, but that's a difference of £19,208 just from switching to a pension with lower charges.

There are, however, occasions when combining pots might not make sense. Some older pensions - particularly from the 1980s - have high exit charges of up to 20%. Then there's final salary schemes, seen as the 'gold standard' of pensions, which often don't allow transfers in or out. You should contact an independent financial advisor if you're thinking of tackling these, or any pensions with guaranteed benefits.

Let technology take the strain

Tracing and then combining your pots can feel like a hassle. That might be why traditional pension providers are facing a new challenge from online pension aggregators like PensionBee and Penfold. With just a few details (your name, date of birth, NI number and any scheme reference numbers), they hunt down your unloved pension pots, bringing them all into a simple personal pension.

The instant bird's eye view on pension performance makes it an attractive choice. Bigger providers look set to follow suit, with Aegon calling for a 'virtual pension'.

We all know that pensions are important to secure the kind of lifestyle we want in retirement. A couple of hours of tracing and combining forlorn pensions could pay dividends in later life.