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Home Finance Lost pension problem risks undermining retirement planning

Lost pension problem risks undermining retirement planning

by Uma Rajagopal
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  • Total value of lost pension pots has grown from £19.4bn to £26.6bn between 2018 and 2022.
  • There has also been a 73% increase in the number of lost pension pots during this time from an estimated 1.6m to over 2.8m.
  • Changing jobs and moving home are key factors in people losing track of pensions.
  • Losing track of a pension can have a significant impact on retirement decision making.
  • The government’s Pension Tracing Service can help you track down a lost pension.
  • According to an FOI request made by HL, the service has taken over 232,000 calls between April 2017-August 2022.
  • 30 October is National Pension Tracing Day where people are encouraged to track down lost pensions.

The Pensions Policy Institute has published a briefing note outlining research on lost pension pots.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“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.

The pandemic has acted as an accelerant to the trend, with more people shifting jobs and we now have an estimated £26.6bn in lost pension money in the system. 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.

There are ways of tracking down lost pensions – the 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. This is a sizeable number but given the scale of the problem -potentially 2.8m pots – it is a drop in the ocean.”

Tips for tracking down lost pensions

  • 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 government’s tracing service on Find pension contact details – GOV.UK (www.gov.uk). 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.
  • 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. 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.

 

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Uma Rajagopal

Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.