Have a frozen pension? Everything you could need to know.

The term “frozen pension” usually relates to an old workplace pension that no longer receives contributions from your former employer or you. The technical term to describe these pension pots is a “dormant pension” or “preserved pension.” It is thought that one in four people have lost track of at least one pension in the UK, with almost three million pension pots unclaimed. If you’re one of them, keep reading for everything you need to know.

How do frozen pensions work?

Although you and your old employer won’t be contributing to a frozen pension, the money within it could continue to grow. That’s why the term “frozen pension” isn’t technically correct. You should also still be receiving an annual statement from your provider. If you aren’t, you should call the provider and update your contact details to ensure you are being communicated with.

Even if your pension pot funds are small, it is still your money, which you’ve worked hard to earn and save. So it’s essential to keep track of all your frozen pensions.

Not only will the regular pension statement give you peace of mind that you know where your pension funds are, but you’ll also benefit from full visibility over all your savings and how they’re performing.

Does a frozen pension still grow?

Yes, A frozen pension could continue to grow. you or your old employer no longer contribute to a dormant pension, the funds may continue to grow over time (although they can also shrink depending on management fees, pension performance, market fluctuations and the risk you may be taking). You will be able to access the pension as usual provided you’re over the age of 55 or combine it with any other pensions you may have.

How do I find dormant pension pots?

If you think you are missing some pension funds from your old employers, then tracking down these frozen pensions is a must. If you don’t have any of your past statements to hand or have simply forgotten the details of your pension fund, there are a couple of ways in which you can locate previous providers.

Option 1 – Speak with your old employer.

If you speak with your previous employer or their HR department, they should be able to give you the details of the company pension provider that you invested with. From there, contact the provider and give them your name, National Insurance number and address so they can check their records. Hopefully, they’ll be able to find your pension policy. If you pass their security procedures, you should be able to update your contact information and they will send you an updated pension statement.

Option 2 – Government’s Pension Tracing Service.

Contacting your employers is the most effective way of finding your old employer pension details. But, if you think you have multiple dormant pensions, it could save you time by using the Government’s Pension Tracing Service. The free database will allow you to enter your employer’s details and, if found, will tell you the contact details for the pension provider. Again, you will need to speak with the provider to get your pension information and to update your details.

What can you do with a frozen pension?

Once you’ve found your “frozen pensions”, what can you do with them? A couple of options you could consider:

Leave your funds in the pension pot.

If your pension has been growing and you’re comfortable keeping a check on a few pension pots, leaving your dormant pension where it is could make sense. However, it’s always a good idea to speak with a pension adviser. Ask them to perform a few checks to see if the pension is suitable for you, that you’re not paying excessively high charges, and that it’s not in a risky fund.

As a guide, even a 0.5% reduction in provider fees could make a difference to your pension by the time you retire. Therefore, sometimes a pension transfer to another provider can make sense. Try our fees calculator to find out more about how pension provider fees can affect your pension over time.

Combine your pensions into one pension pot.

Now you’ve found an extra pension or multiple pensions, it could be a good idea to merge your pensions. An experienced and independent pension adviser will be able to check your current pension policies and assess them against the market to see if you’re getting a good deal. If a pension consolidation is suitable for you, they will advise this course of action and can help combine your pensions.

By combining your pensions, you might find it easier to keep track of your funds and ensure that you don’t lose sight of your savings again. You could also benefit from better performance, lower fees and having a pension that’s more suitable for your needs.

Can I cash in a frozen pension?

If you’re aged 55 or over and you have a defined contribution pension, you can cash in a frozen pension.

You can do this in the same way as you would with any pension. You could take a 25% tax-free lump sum, arrange for regular payments out of the account (called pension drawdown), use the money to purchase a pension annuity, or cash in the entire pension pot. However, cashing in a pension is not a decision to be taken lightly due to income tax charges and the detrimental impact this could have on your retirement.

We’d always recommend speaking with an adviser before taking any amount of money out of your pension, especially if you are tempted to cash it in as a one-off lump sum. An adviser can ensure that you’re making the right decision and are fully aware of the impact that withdrawing money could have on your later life.

What charges will I have to pay?

If you decide to consolidate, transfer or cash in your pension, you may have to pay your existing provider an exit fee to move your funds. Before deciding to move or withdraw your pension, we always recommend seeking pension advice from one of our experienced pension advisers here at Hilltop Financial Planning. 

Get pension advice at Hilltop Financial Planning

Are you looking to unlock the potential of your frozen pensions? Look no further than Hilltop Financial Planning. 

Our dedicated team of pension advisers is here to provide tailored advice to help you maximise the value of your frozen pensions. Whether you’re seeking to consolidate, transfer, or unlock the benefits of your pension, our advisers deliver personalised solutions to suit your financial goals and help secure your retirement future. 

If you’ve tracked down your “frozen pensions” and are looking for advice on what to do with them, our advisers are on hand to give you a quick pension summary to tell you what you currently have. They can talk you through all your options, whether it be a pension transfer, pension consolidation, or retirement withdrawal strategy. 

For pension advice made personal, please call 0161 413 7051 or request a free call back and our experts will get in touch at a time that’s convenient for you.