New figures from the Pensions Policy Institute (PPI) suggest that an estimated £26.6 billion is sitting in unclaimed, dormant, or lost pension plans by some 2.8 million people across the UK. However, as part of Pension Awareness Week, Hargreaves Lansdown has shared how people can track down pension pots to boost their retirement income.
Pension Awareness Week runs from October 31 to November 4 and is delivered by Pension Geeks, MoneyHelper and the pensions industry in partnership with the Department for Work and Pensions (DWP). The aim of the dedicated week is to help people make sense of their pension savings and other money matters.
The new PPI data shows that since 2018, the value of lost pension pots in the UK has risen from £19.4bn by 37.7 per cent to £26.6bn - the equivalent of around £7bn. Worryingly, the total value of lost pots is now equivalent to a quarter of the annual cost of the State Pension.
Why do people lose track of their pension pots?
Every employer must now provide all workers over 22-years-old and earning more than £6,240 a year with a pension plan that both they and their employees pay into. This has resulted in more than 10 million people having been ‘auto-enrolled’ since 2012.
However, many employees don’t pay much attention to their workplace pension, or what it’s worth and when they move house or change jobs they may forget about it. In addition to this, it’s estimated that the average person in the UK will change jobs every five years, which means lots of pension pots to keep track of.
Commenting on the latest figures, Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “The number of lost pensions is growing at an alarming rate and risks undermining our retirement planning. We are more likely to change jobs several times during our careers and auto-enrolment means you could have a pension for each one.
“Not updating your contact details for these pensions when you move to a new house means it is easy for pensions to go astray and you won’t have a full idea of what you have.”
Ms Morrissey highlighted how the pandemic acted as an accelerant to the trend as more people switched jobs during that turbulent time.
She explained: “The average amount in lost pensions is just over £9,400 - this may not sound like a lot but over time investment growth can add up to a tidy sum and if you lose track of more than one pension, it can have a major impact on retirement planning decisions.
“Finding a lost pension could be the difference between struggling to make ends meet or being a bit more comfortable in retirement. It might mean you can afford to go part-time in the years before retirement or need to stay in work for longer, so it’s vitally important to keep your contact details for your pensions up to date.”
How to trace a lost pension pot
The UK Government’s Pension Tracing Service can help you find contact details for an old scheme. A recent Freedom of Information request submitted by Hargreaves Lansdown showed the service had taken over 232,000 calls between April 2017 and August 2022.
However, when you consider there could potentially be 2.8m lost pension pots, it’s just a drop in the ocean.
Tips for tracking down lost pensions
Helen Morrissey shares her top tips for tracking down your lost pension pots and what you need before accessing the free service on GOV.UK:
- Make a list of everywhere you have worked during your career so far and check to see if you have pension paperwork for all of them
- If you have lost details of an old pension scheme, contact the UK Government’s tracing service on Find pension contact details here - it won’t tell you how much is in the pension, but it will help you find contact details
- You need the name of the company you worked for, the name of the pension scheme, or the name of the pension provider
- If you prefer to speak to someone, call the Tracing Service on 0800 731 0193 - Monday to Friday, 8am to 6pm
- Whenever you move home, it is worth adding pension providers to the list of people you need to notify so they have up to date contact details for you and you don’t miss out on important communications
Pension consolidation
If you have accumulated several different pensions over your working life, it might make sense to consolidate them, so you don’t lose track of them - this can help you have a much clearer idea of exactly how much you have, so you can plan with more certainty.
However, think carefully before you consolidate as some pensions might operate expensive exit fees if you transfer, or you might miss out on valuable benefits like guaranteed annuity rates, so take advice or guidance as necessary to make sure you come to the right decision for you.
Find out more about tracking down a lost pension on GOV.UK here.
To keep up to date with the latest pensions news, join our Money Saving Scotland Facebook page here, or subscribe to our newsletter which goes out three times each week - sign up here.
READ NEXT
- New Pension Credit claimants who get an award for at least 1p will qualify for extra £324 payment
People of State Pension age to get £300 on top of Winter Fuel Payment from next month
Older people making new claim for Pension Credit could get decision before Christmas
State Pension petition calling for £380 per week could now be debated in Parliament
