A staggering £20 billion of pensions pots is being left unclaimed. We run through how savers can track down lost workplace or personal pensions.
Up to £20 billion worth of pension pots is being left unclaimed, according to the Association of British Insurers (ABI).
Research carried out by the Pensions Policy Institute (PPI), on behalf on of the ABI, showed that a total of 1.6 million pensions in the UK were being left dormant.
In the largest study yet on the subject, the PPI surveyed firms representing about 50 per cent of the private defined contribution pensions market. Of those surveyed there were around 800,000 lost pensions, worth an estimated £9.7 billion.
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By scaling this up to include the whole market the PPI reached the conclusion that 1.6 million pension pots were going unclaimed, worth an estimated total of £19.4 billion. This is the equivalent of nearly £13,000 per pot.
Changing work patterns mean that employers are increasingly racking up multiple pensions, with the UK employees now having an average of 11 jobs during their working life.
Pensions from jobs at the start of a career are the most likely to be forgotten about, with retirement not at the forefront of employees’ minds while in their 20s. Nearly two-thirds of Brits now have more than one pension.
With such working patterns unlikely to change, alongside the introduction of pension auto-enrolment, the number of unclaimed pensions is expected to rise. As the ABI notes: ‘The government predict that there could be as many as 50 million dormant and lost pensions by 2050.’
According to Dr Yvonne Braun, the ABI’s director of long-term savings and protection, the research underlines the need for the government to push ahead with its creation of a pension dashboard, slated for launch in 2019.
‘It is important that the government stands by its promises to take forward the pensions dashboard. This project has cross-party support, with the backing of consumer groups, and could mean a more secure retirement for millions of savers,’ she notes.
A pension dashboard would allow savers to see all of their retirement pots in one single place, making managing their assets and planning for retirement easier.
Recently speaking in parliament, Guy Opperman, minister of pensions and financial inclusion, said the government is in daily contact with pension industry figures regarding the creation of the dashboard.
What to do if you think you’ve lost a pension pot
However, no such tool yet exists. In the meantime, savers can make use of the government’s free pension tracing service. This can be found here.
After entering the name of your former employee, you should then be provided with a contact number. If you contact this number you will need to be able to quote them your PAYE number, details from an old pay slip or your pension policy number.
However, if your former employer has since gone out of business or been taken over by another company, tracing a lost pot through the tool is not so easy.
Once you’ve tracked down your pension, savers may want to look into consolidating their pensions into one pot.
As Jon Greer, head of retirement policy at Quilter, points out: ‘Once you’ve tracked down all your funds you should consider whether it is worth combining all your pensions into a single plan.
‘This may provide you with a clearer picture of how best to plan for the rest of your retirement; means you only have to manage one pot rather than several and may also mean your fees are lower.’