In support of National Pensions Tracing Day, Britons are encouraged to check whether they have savings they did not know about – as it is estimated one in 20 people in the UK could be in this situation.
The average lost pension pot is said to be worth £9,500, which increases to £16,004 for those aged between 55 and 75.
One in four people have lost track of at least one pension in the UK, with almost three million pension pots unclaimed. The estimated combined value of these unclaimed pensions is £26.6 billion.
A large majority (86 percent) of savers had never traced a lost pension, with 83 percent not aware of the government’s pension tracing service, new data found.
Of those who do have a pension scheme, 41 percent had less than £50,000 in their pensions, while nine percent had between £50,000 and £100,000. As the cost of living crisis continues, pension savers are urged to explore different options to boost their retirement income.
It’s estimated there could be £26 billion worth of unclaimed pension pots out there just waiting to be claimed.
If someone has changed jobs a lot or simply isn’t aware of how to track their pension pots, there’s a high chance they’ll have some savings to find from years before.
To help, people can visit the National Pension tracing service website which will help do some of the heavy lifting and locate these.
Hetty Hughes, manager of long-term savings at the Association of British Insurers (ABI) explained that pensions have often been cast to the bottom of people’s to-do list.
However, those who embrace them will see a “big payoff at retirement and with 26 billion of lost pots waiting to be claimed there are plenty of reasons to check on yours.”
Keep track of what you’ve got
Ms Hughes explained that thanks to auto-enrolment, most employees will have at least one pension pot somewhere and the first step in preparing for retirement is to keep track of them.
She encouraged savers to “dig out your pension paperwork” and make sure they’re signed up for online access to their accounts, then they can easily keep track of what they’ve got and how it’s doing. It’s also a good idea to update one’s nominated beneficiary – the person would like to receive their pension benefits if anything happens to them.
When pot consolidation makes the most sense
ABI research found 68 percent of adults aged 30-55 years old – those the least engaged with workplace pensions – expect to work for longer before they can retire than first thought.
Given the likelihood that people will need to work for longer and therefore will continue contributing to a workplace pension, it’s key that they know if they’re retirement-ready.
When this is done will depend if they’re still working and contributing to a workplace pension, as if they withdraw and pool that pot too early it could mean they’re no longer an active member and will miss out on valuable employer contributions for later life.
Kate Smith, head of pensions at Aegon, said the firm is calling on the government to deliver the guidance needed by pension providers to help deliver the long-promised UK pension dashboard to help with this issue.
She said: “The pension dashboard will enable people to see all their pensions online, securely, in one place. Once up and running, people should never again lose track of their old pensions.”
Smith added that she wanted lost pensions to “become a thing of the past”.
Royal London’s consumer finance specialist, Sarah Pennells, warned that anyone who has had more than one job could miss out on cash in retirement due to lost pensions.
She added: “If there’s a lost pension with your name on it, you could be thousands of pounds better off when you retire.”
The Pension Tracing Service has explained how people may have lost a pension:
- Those who have moved and changed their address
- Those who have changed their name
- Those who have changed jobs and lost track of paperwork
- Change of contact details
- Pension provider/scheme transferring
