With recent figures suggesting nearly £20 billion worth of pensions are going unclaimed, George Square Financial Management explains the problem with lost pensions, and the best way to solve it.
It’s not always easy to keep track of a pension, especially if you’ve been in more than one scheme, or have changed employer throughout your career.
Last year, the Pensions Policy Institute surveyed firms representing about 50% of the private defined contributions market. Results revealed 800,000 lost pensions worth an estimated £9.7 billion* – at least six times higher than previously estimated. The Institute predicts that, if scaled up to the whole market, there are collectively around 1.6 million unclaimed pots worth £19.4 billion – the equivalent of nearly £13,000 per pot.
These findings highlight the scale of the problem, and the figures are likely to be even higher still. The research did not look into lost pensions within the public sector, or with trust-based schemes typically run by employers. These unclaimed pensions could make a difference to millions of savers who have simply lost touch with their pension providers.
Providers do make considerable efforts to help, spending millions every year trying to reunite people with lost or forgotten pensions. In 2017, more than 375,000 attempts were made to contact clients, leading to £1 billion in assets being re-established. However, firms are unable to keep pace with a mobile workforce that moves jobs and homes more often than ever before.
Nearly two thirds of UK savers have more than one pension, and changing work patterns means that the number of people with multiple pensions will increase. People typically lose track of their pensions when changing jobs or moving home. The average person will have around 11 different jobs over their lifetime and move home eight times. The Government predicts that there could be as many as 50 million dormant and lost pensions by 2050.
The best way to keep track of your pension is ensuring your paperwork is up to date. If you do lose track of a pension, you should write down the dates and contact details of the companies you had pensions with. When you have all the information, then you can contact the pension provider directly to find out how much there is in your pension pot.
Alternatively, you can contact the Pension Tracing Service. They can help you find the details you need to trace any pensions you may have lost or misplaced.
You can also contact them to track down unclaimed personal or workplace pensions for deceased relatives. It’s possible that a surviving partner or relative could be eligible to claim a percentage of their estate.
The sooner you trace lost pensions, the better. If you have any concerns over finding your misplaced pension, contact our team today. Our independent financial advisers can work with you to help find the best way to move forwards.
* The Lost Pensions Survey includes data from 12 large insurers, covering around half of the defined contributions pensions market.