Past may be the key to the future for people planning for retirement

When it comes to our finances, for many

of us it’s about the here and now: how do we manage our income and expenditure and save for a rainy day?

Whilst the immediacy of paying our bills is understandably our biggest priority, possibly the most important element of longer-term financial planning is your pension – do you have one,

what type is, how will you benefit and when?

The subject of pensions is of course more

high-profile than it has been in the past, and it’s positive that most people starting work today should be automatically enrolled in a new workplace pension. You pay some, your employer pays some and so does the Government. What’s not to like?

However, for others at a later stage in life there is a chance they have moved around during their careers and it’s likely that, as a result, they will have been a member of a company pension scheme at each of these employers.

On the face it, that sounds great, with the prospect of various incomes when you retire.

The reality is slightly different. Recent research from Aegon showed that the number of people with several pension pots had risen by 11per

cent over the last five years, with 73 per cent having multiple pots.

More importantly, the research revealed only 21% knew the value of these pensions. Almost one in five said they had no idea how to retrieve

a lost pension. For those nearing retirement this is a problem, and a big one at that.

So, what to do about it?

Well, firstly, if they don’t know already, every individual needs to be aware of the pension freedoms that were introduced several years ago. But to take maximum advantage of these freedoms you need to know what you have,

and where it is.

People can lose track of their pensions for various reasons but there are ways and means

to help you, not least the pension tracing

service operated by the Department of Work

and Pensions.

So you have you decided to get your pension house in order and maybe you have found everything you are looking for – what now?

One option is to look at what you want to

do with your pension funds. But with choices comes huge responsibility and corresponding risk. There is no doubt the new regulations

allow for much greater flexibility, enhancing

the ability of an individual to plan for

the future.

In recent years, some companies, particularly those who operated defined benefit pension (DB) or final salary schemes, have offered members a premium to transfer out of the scheme. DB schemes are very much the gold standard when it comes to pensions – it’s a promise by an employer to pay an employee a certain percentage of their salary once they reach the contracted pensionable age. This is payable until the member or, in most cases, a dependent dies.

These schemes are very expensive for companies to operate so you see can why they might encourage members, through a premium, to transfer out.

The one clear benefit for them is that they discharge their responsibility to you.

For members there are benefits and drawbacks. The benefit of staying in the scheme is that you receive the guaranteed amount until you die. But effectively the pension dies with you, however long you have been receiving payments.

By transferring, the biggest benefits are that you have flexibility and, of course, a possible premium on the value of the fund. In addition, if you died, whatever is left can pass to a nominated beneficiary, potentially tax free.

It goes without saying that any decisions on your pension should never be taken lightly.

And no action should be taken without seeking professional independent advice.

The area of pensions is a complex one, and it’s for a very good reason that only certain financial advisers are regulated and authorised to provide pensions advice.

It’s never too early to prepare for retirement

– start looking for those old pensions, the past may be the key to your future.

Keith Brooks is pension adviser and chartered financial planner at Aberdein Considine.