It is believed that there are as many as 1.6m lost pensions worth a staggering £19.4bn could remain unclaimed with moving house being attributed as the main reason people lose track of their pensions. We found that people lose approximately £23,000 on average. That’s a vast amount of money that people are losing out on.
Here, we take a look at why you shouldn’t let go of your pensions:
Why is it so important to find lost pensions?
It is crucial to find any lost pensions to ensure that they perform well to give you the best possible retirement you can get. Most people’s pensions are placed in defined contribution schemes, also known as money purchase plans. With these types of pensions, the amount you will end up with at retirement greatly depends on how much you have paid in, your employer contributionsand your investment returns.
The PPI located 800,000 lost pensions worth an around £9.7bn. If you scale this up to the whole market, this means that an estimated 1.6m pensions worth a total of £19.4bn could be lying unclaimed.
Why we lose track of our pensions
Lots of us move housethroughout our lives, and sometimes we forget to inform our pension providers of the change of address. This means that we never get to see the future annual statements providers send out, therefore losing track of our retirement savings. The Government estimates that there may well be over 50 million dormant and lost pensions by the year 2050.
Changes to work patterns is another reason we lose one or more of our pensions. It’s rare for people to stay in a job for life these days, with the DWP calculating that the average person will have at least 11 different jobs throughout their lives.
Research from a popular insurance company found that 64% of UK adults have multiple pensions. Among those with multiple pensions, 22% (which equate to more than 7m people) know they have at least one lost pension pot. 1 in 4 under 55s believe they have lost track of at least one of their pensions.
The UK’s lost pensions
To aid those who have lost track of their past pensions, the government is currently working on a new ‘pensions dashboard’ which will enable consumers to see all of their pension arrangements online in one place.In the meantime though, it is down to us to keep track of all our own pension pots.
Finding your lost pensions
Locating a lost pension could make a significant difference to your retirement income when you stop working. The sooner you track downyour lost pension pots you have forgotten about, the sooner you’re be able to check if your money has been working as hard as it possibly can for you.
You can also ensure that what you are paying in management fees is competitive. If you have got vrious different pensions, you may want to think about combining them, so that you have just got the one single pension to keep track of. You may want to consider seekingprofessional financial advice though, as many pension plans come with good benefits, which you might not want to give up.