Call us on 01772 804 404 (Mon-Thurs 9am-8pm Fri 9am-5pm)

Money Tips

Could YOU own a share of the UK’s £20bn lost pension mountain?

By |

Profile Pensions
Profile Pensions

As many as 1.6m pension pots worth £19.4bn could remain unclaimed, according to new research, with frequent job changes the main reason people lose touch with their pensions.

The Pensions Policy Institute (PPI), on behalf of the Association for British Insurers (ABI) surveyed pension companies representing about 50% of the defined contribution pensions market.

Most people’s pensions are defined contribution schemes, otherwise known as money purchase plans. With this type of pension, the amount you’ll end up with at retirement depends on how much you’ve paid in, your employer’s contributions (if it’s a company scheme), and investment returns.

The PPI found around 800,000 lost pensions worth an estimated £9.7bn. Scaling this up to the whole market, this means that an estimated 1.6m pensions worth a total of £19.4bn could be lying unclaimed, equivalent to just over £12,000 per pension pot.

Dr Yvonne Braun, ABI’s Director of Long-Term Savings and Protection, said: “These findings highlight the jaw-dropping scale of the lost pensions problem. Unclaimed pensions can make a real difference to millions of savers who have simply lost touch with their pension providers.”

Why we lose track of our pensions

Changing work patterns are often the reason we forget about one or more of our pension plans.

People rarely stay in a job for life now, with the Department for Work and Pensions calculating that the average person will have around 11 different jobs over their lifetime.

Lots of us move home regularly too, and sometimes forget to notify pension providers of our change of address. That means we never get to see the annual statements providers send out, and we lose track of our retirement savings. The Government estimates that there could be as many as 50 million dormant and lost pensions by 2050.

Separate research by insurer Aegon found that just under two thirds (64%) of UK adults have more than one pension. Among those with multiple pensions, more than one in five (22%), equivalent to more than 7m people are aware of having at least one lost pension pot.

And according to another study by Aviva, 17% of those with forgotten pensions think they’ve misplaced two pension pots, while 6% believe they’ve forgotten three or more.

The Government is working on a new ‘pensions dashboard’ which next year should enable consumers to see their pension arrangements online in one place, but in the meantime the onus is on each of us to keep track of all our pension pots ourselves.

Find your pensions

Locating a lost pension could make a real difference to your retirement income when you stop work.

The sooner you find any pension pots you’ve forgotten about, the sooner you’ll be able to check your money’s working as hard as it possibly can for you.

You can also make sure that what you’re paying in management charges is competitive. If you’ve got loads of different pensions, you might want to think about consolidating them, so that you’ve just got the one pension to keep an eye on. You might want to consider getting advice though, as some pension plans come with valuable benefits which you may not want to give up.

If you need help tracking down any pensions you’ve lost track of, or advice on whether or not to consolidate your plans, call Profile Pensions on 01772 804 404 or contact us.