Tracking down a lost work pension from many years ago
Q&A: What are people’s pension options when they move jobs?
Even though your father left the business a long time ago, his pension rights are still intact in relation to any pension he built up in the years he was working with them. File photograph: iStock
When my father moved jobs many years ago, he never thought about the pension. It cropped up recently when we were talking and he is now wondering if there is any chance of finding out what happened to it? He’s retired now. Would be still be entitled to claim any pension from the company? And how would he go about it? It’s a long time ago and anyone he would have dealt with is long gone. The company has also changed hands since.
Mr C.M., email
Ah pensions. So important to us in later life but something we only really focus on when it is long past time to get them organised.
You tell me this employment dates a long way back – to the 1970s – which makes your father one of the lucky ones. Private sector pensions were not the norm back then so his employer appears to have been ahead of their time in employee benefits.
The other plus is that, at that time, where pensions did exist, they were of the defined benefit or final salary model. They were much easier for people to understand and, unless your employer went bust, better value for pension scheme members.
But what can your dad do now and, more widely, what are people’s pension options when they move jobs?
Get in touch
The first thing to do is to get in touch with the company. Even though your father left the business a long time ago, his pension rights are still intact in relation to any pension he built up in the years he was working with them.
Rather than trying to unearth details of trustees at this far remove, his best bet is to contact his old employer’s human resources department. They will know who are currently the trustees of the occupational scheme and can either pass his details on to them for contact or give him the necessary details to allow him contact them.
Of course, in some cases the business may no longer exist, especially for people looking back at a job they had many years ago. That’s not the case here but, for those whom it does affect, the thing to do is to contact the regulator, the Pensions Authority, which will be able to tell him who is trustee of the scheme. It keeps records on all those things and schemes are obliged to register the details with it.
There’s also the danger of the old employer going out of business or of the scheme becoming insolvent, in which case you lose out
There will have been some onus on the scheme trustees to track him down as well, as I gather from the letter that your dad is retired for some time. It may be, of course, that he has moved address since he worked for the company concerned and PPS numbers weren’t in issue back in the 1970s so it may be asking a lot for the trustees to track down a deferred pensioner in your father’s position after 40 or more years.
However, the Irish Association of Pension Funds has noted that trustees have a legal duty under the Pensions Act to ensure the payment of benefits in accordance with the scheme rules and that it is likely that trustees would be expected to make some efforts to trace members.
Reduction in pension
In this case, I am aware that the company concerned has gone through some tough times and part of the fallout of that has been a dramatic reduction in the value of occupational scheme members’ pension rights.
It might be no harm for your father to talk to former colleagues if he is still in touch with any to get some sense of what it might mean for him, assuming they have been paying closer attention to their deferred pension.
The truth is that whatever pension he had been in line for at the time he left the business, any benefit he will receive now will be just a fraction of that. But, having said that, he’s getting nothing from it at the moment and he is certainly entitled to some pension from that fund so it is worth pursuing.
As he is already retired, additional “windfall” income that he may not have previously considered in his financial planning will no doubt be welcome.
On the broader issue, what are the options for people leaving a company and its pension scheme and why should you not ignore the issue when moving jobs?
There are several reasons for taking action on your pension when you move jobs. First, in the modern world, we are all moving jobs more frequently. Increasingly this can also mean relocating to different countries. It can be very difficult to keep track of multiple pensions in multiple geographies. And, as in this case, you might simply forget about a valuable asset.
There’s also the danger of the old employer going out of business or of the scheme becoming insolvent, in which case you lose out compared to those who have already retired and those who have paid additional voluntary contributions into the scheme.
Finally, the more removed you are, the less awareness you will have of how your funds are being invested or of exercising any say over investment choices. Communication with deferred members about preserved benefits will never be anything close to engagement with active members.
You may be able to transfer your accumulated pension assets into the pension scheme of your new employer
And, if the worst happens and you die before retirement, it can make tracking down your assets for probate even more tricky for your executor – even if that is not foremost in most people’s mind as they look forward to a new job.
So what are your options?
First, of course, you can leave things where they are. Especially if you are a member of one of the declining number of defined benefit schemes, this might be worth considering. However, the DB pension scheme is only a “promise to pay”, not the guarantee it was sold as for many years. If the company (or the scheme) fails, you could be left with significantly less money in your retirement than you had anticipated.
Second, you can arrange to have any pension funds transferred into a personal retirement bond, also known as a buy-out bond. This is done by the trustee of your pension scheme and effectively means your accumulated pension savings from that company are put into a policy where you cannot touch them – at least until the age of 50 – but you retain control of investment policy and decisions.
Third, depending on how long you have been a member of the scheme, you may be able to transfer the assets to a PRSA (a personal retirement savings account).
In certain cases, you may be able to transfer your accumulated pension assets into the pension scheme of your new employer. However, whether you can do so or not depends on the rules of the new employer’s scheme.
Of course, if you were in the job, or the pension scheme, for less than two years, you can get your money back but remember that this will be only your contributions, nothing else. You’ll also have the basic rate of tax deducted from those funds and you’ll be back at square one in terms of pension planning, at least for those years.
Many of these options would not have been open to this letter writer’s father back in the 1970s but it does give some sense for others of what their choices are if they find themselves in a similar scenario today.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email firstname.lastname@example.org. This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into