More than three million pension pots have become separated from their owners, with billions of pounds at stake. The average lost pot is worth £6,220, meaning tracking down old savings could give retirement finances a major boost.
£18.7 Billion in Unclaimed Pensions
In total, more than £18.7 billion is sitting in lost pension pots, according to latest research by the Pensions Policy Institute (PPI). More than 80% of this belongs to people under 55, reflecting higher job mobility, the new workplace pensions auto-enrolment scheme, and the fact that younger savers are less likely to have accessed their pensions.
Older savers have an even bigger incentive to get busy. The average lost pension for those aged between 55 and 75 is even higher at £13,620.
In practice, older people tend to be better at tracking down missing pensions. The over-75s are least likely to leave pots unclaimed, with many rounding up the money as they near retirement age. Also, they typically had fewer jobs and pots than workers today.
Five Steps to Track Down Lost Pensions
Jonathan Watts-Lay, director at financial wellbeing specialist WEALTH at work, urged savers to check what they had accumulated, particularly in old workplace pensions. “Pension pot proliferation affects most UK workers today. If details are not kept up to date, it can be easy to lose sight of what has been saved.”
He named five steps to track yours:
- Build a pension timeline. List your previous employers and dig out old payslips, pension statements, letters, emails, employment contracts, P45s, P60s and CVs. Pension correspondence is particularly useful for identifying scheme names and providers.
- Contact previous employers. Your former company's human resources or payroll teams should be able to tell you which pension provider ran the workplace scheme while you worked there.
- Use the government’s free Pension Tracing Service. This can be a massive help if you can’t identify the provider. Visit gov.uk/find-pension-contact-details to search for contact details for workplace and personal pension schemes.
- Ask the provider for an up-to-date statement. Check your pot’s current value, charges, investments and retirement options. Find out whether valuable guarantees or penalties could affect your choices.
- Keep your details updated. Store your policy number, provider’s contact details and online login securely. Tell pension providers whenever you move home or change email address.
Be Careful Before Transferring
Watts-Lay said taking a few practical steps today can help people to tackle this growing problem. “It could make a significant difference to future retirement plans so people should take the time to track down any lost pensions.”
Once you’ve found an old pot, don’t automatically transfer it into another pension. Combining pots can make savings easier to manage, but you could lose valuable benefits, including guaranteed annuity rates or protected pension ages. Defined benefit pensions, sometimes called final salary schemes, need particular care. Take regulated financial advice before transferring a pension fund worth more than £30,000.
