When you think about how often you’ve moved jobs or home, it’s not surprising that it’s common to lose the occasional important document. But the number of lost pensions could make a huge difference in achieving retirement aspirations for pensioners who have lost them.
The UK has almost £20 billion in unclaimed pensions, research from the Pensions Policy Institute (PPI) has revealed.
PPI estimates that there are as many as 1.6 million unclaimed pensions from an analysis of the market. The figure could be even higher once public sector pensions are factored in.
With the total value of these unclaimed pensions at £19.2 billion, the average value of an individual lost pension is £12,125. While it’s not a huge amount, it could provide a welcome boost to retirement plans. There’s likely to be some pots that hold significantly more than the average value too. Lost pension pots could mean you’re unable to achieve some of your retirement dreams, despite having the cash to do so.
A growing problem
The issue of lost pensions is likely to grow unless action is taken.
The research found that people typically lose track of their pensions when changing jobs or moving home.
Nearly two-thirds of UK savers have more than one pension. However, the introduction of auto-enrolment and workers moving jobs more frequently means the number of pensions an average person holds is likely to rise. Over their lifetime, the average person has around 11 jobs. If each of these offers a pension, it’s a lot of different schemes to keep track of.
On top of this, younger generations are more likely to move home frequently, partly due to the rising trend in renting over owning a home. Forgetting to update the address that a pension provider holds means it’s easy to lose touch with your retirement savings.
Dr Yvonne Braun, Director of Long-Term Savings and Protections at the Association of British Insurers (ABI), 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.
“The industry has stepped up its efforts to reconnect savers with their lost nest egg, developing a new framework launched earlier this year to help pension providers trace ‘gone-away’ customers more consistently. But industry efforts can only go so far; we need a radical digital solution to cope with the way society is changing, or the problem will get worse.
“It is important that the government stands by its promises to take forward the Pensions Dashboard.”
What is the Pensions Dashboard?
The Pensions Dashboard project aims to make it easier to keep track and understand how your pensions are growing.
Your retirement income rarely comes from one source; making it difficult to keep track of everything. It can also make it challenging to effectively plan your retirement too. The problem comes because we tend to look at each pension separately (or forget about some of them altogether). However, for effective financial and retirement planning, you need to look at the bigger picture.
The proposed Pensions Dashboard will let you see all your pension savings at the same time through an up-to-date online portal. As a result, it will be easier to get a snapshot of how your retirement savings are progressing, as well as the individual pots you’ve accumulated.
The project is still in the development phase, but it’s hoped the Pensions Dashboard will be available from 2019. In the 2018 Autumn Budget, it was revealed that the project will benefit from a £5 million boost.
What to do if you have lost pensions
While the Pensions Dashboard is a positive step, it doesn’t help you if you’re worried about lost pensions now. Here are some steps you can take to reconnect with lost pensions and remain organised.
1. Contact the pension provider: If you can recall who your pensions are with, this is usually the easiest option. You should receive statements giving an update of your pension regularly. If you haven’t received one in a while, it’s likely they have an old home address for you. Where possible have details such as your National Insurance number and pension plan number handy to speed up the process.
2. Speak to your employer: If you’ve been enrolled in a Workplace Pension, you can also contact your employer or former employer directly. If it’s run by the firm, they’ll be able to provide you with details and update your contact information. If the pension scheme was operated as a personal or stakeholder pension, they’ll be able to provide the details of who to speak to next.
3. Use the Pension Tracing Service: If you’re struggling to find the necessary details of either your pension provider or employer, the Pension Tracing Service could help. It’s free to use and searches a database of pension schemes.
4. Consider consolidating your pensions: If you find you have multiple pensions to keep track of, consolidating them may be the best option. However, there may be fees associated with this and you might also lose other valuable benefits, therefore caution needs to be taken to ensure you fully understand the benefits you have in your pension. As a result, it’s not the right option for everyone. Contact us today to discuss the structure of your retirement savings.
5. Keep your details up to date: Once you’ve found ‘lost’ pension funds, make sure you keep on top of details. Always let your employer and pension provider know if you move home or change your name. It means you’re easier to stay in contact with and should make sorting out any future issues much smoother.
Maintaining contact with your pension provider and tracking down any lost savings is just the first step in creating the retirement that you want. With the support of financial planning, you can align your retirement ambitions and finances. Whether you have just reconnected with old pension savings or want to review your retirement provisions, please get in touch with us.
Please note A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Workplace pensions are regulated by The Pensions Regulator.
