Millions of pension pots risk being forgotten or lost, with new research from Standard Life revealing that one in four UK adults (26%) don’t know who their current pension provider is2, while two-thirds (66%) have never tried to track down lost pots – despite the average lost pot being worth £9,4701.
The findings expose a worrying lack of awareness about what happens to pensions when people change jobs. A quarter (24%) of adults don’t realise that moving employers can lead to multiple pension pots, and fewer than one in three (30%) have kept track of all their pensions from previous jobs.
The power of pension consolidation
While consolidation is often posed as a solution to those struggling to keep track of multiple pots, Standard Life’s research also found that three in five adults (60%) have never combined their workplace pensions. This trend is particularly pronounced among older groups with almost three in four of the Silent Generation (73%) saying they’ve never consolidated their pension pots, and two in three Baby Boomers (65%) and Gen X (66%) – although half of Millennials (50%) and 55% of Gen Z have also never consolidated their pots.
Lost pensions remain unclaimed
Despite the potential value of lost pensions, two-thirds (66%) of those who haven’t consolidated their savings have never tried to track them down. While 27% say they intend to, 39% have no plans to do so. Among those who haven’t attempted to locate their pots:
• A third (31%) don’t know where to start
• Almost one in five (17%) believe it’s not worth the effort
• Over one in ten (11%) say they don’t have time
• One in ten (10%) feel it’s too much hassle.
Mike Ambery, Retirement and Savings Director at Standard Life, part of Phoenix Group, commented: “Millions of people risk losing out on valuable retirement savings simply because they’ve lost track of their pensions. With multiple job moves now the norm, it’s easy for pots to slip through the cracks. While tracking pots down may seem like a hard task, there are simple steps you can take to get your pots in order.
“Even if consolidation isn’t the right option for everyone, simply knowing where your pensions are and keeping a record can make a real difference. Once you have a clear picture, you can understand whether consolidating appropriate for you – it can simplify your savings, reduce fees in come cases, and give you a better view of your overall retirement income. However, some pots may have valuable guarantees or benefits that could be lost if you move them.
“Each individual pot might not seem significant on its own, but together they can add up to a substantial boost to your retirement income. By finding and managing lost pots, people could significantly improve their retirement lifestyle and make sure no hard-earned savings go to waste. The good news is help is at hand, with Government initiatives like pensions dashboards and automatic small pot consolidation on the way – but the timelines remain uncertain, so it’s important to take control now rather than wait.”
Mike Ambery shares three top tips for individuals who have lost track of their pension pots:
1. How can you find old pension plans?
“If you want to find out if you have any old pension plans, there are a few routes available to help. “Pension providers should send you a statement every year. This includes key information, like the value of your plan and how much you could potentially get from it in retirement, so a good place to start is checking for any old paperwork that might have the name of your previous employer or details of the scheme's administrator or provider. For those who are struggling to find old paperwork, don’t worry, this isn’t your only option. If you had a pension plan set up for you through a job, you can contact your previous employers directly for details of their scheme. And if your employer provided access to a personal or stakeholder scheme, they'll be able to give you information about the pension provider. The government's free Pension Tracing Service is a good way to get up-to-date contact details for old employers and pension providers. If you have your National Insurance number and dates of your previous employment, you can contact your employers and providers to find out everything about your old plans”.
2. How can you stop yourself from forgetting old plans?
“There are several useful steps to help you make sure you don’t forget all about your old plans in future. “First, check that your personal details – like your home address and phone number – are up to date across all your pension plans (your current plan and your older ones). This helps your providers, past and present, contact you with any important information, and can also help you keep a record of where your plans are. It is then important to make sure that your providers have your personal email address. This can help them contact you if you leave a job and no longer have access to your work email. You could also consider consolidating all your plans into a single plan. This can make it easier to keep track of your pension savings when they’re all in one place, and can also reduce paperwork. Bringing plans together won’t be right for everyone, though, so check that you won’t be missing out on any benefits or guarantees by doing so. If you’re unsure about your options, you may want to seek advice from a financial adviser. You can find an adviser in your local area at Unbiased. You can also access free impartial guidance from MoneyHelper.”
3. Why is it worth keeping tabs on your plans?
“With the current backdrop of economic uncertainty, you might be feeling less confident about your financial future. But, even if you and your previous employer only paid into a pension plan for a relatively short period, it could still help give your retirement savings a boost, especially if it’s benefited from the power of compound interest and investment growth over time. Keeping track of your plans helps ensure you receive all the money you’re entitled to later in retirement. And the more you have when you reach retirement, the more comfortable a lifestyle you’ll be able to enjoy. It’s also worth checking your State Pension forecast via GOV.UK to understand what you’re on track to receive and when, and whether you might benefit from paying voluntary National Insurance (NI) contributions.”
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