As of 2022, the value of forgotten pensions in the UK was said to exceed 26 billion pounds. This unclaimed sum is spread across approximately 2.8 million pension plans. That number looks set to rise as the government predicts there could be as many as 50 million lost pots by 2050.
Let’s take a look at how pension savings go missing, and how to find your lost pensions.
Why Are There So Many Unclaimed Pension Funds?
Common reasons for losing track of a pension fund include moving home and changing jobs. Employers have been bound since 2012 to automatically enrol employees into a pension scheme on an opt-out basis. Over 10 million workers have been auto-enrolled since the new regulations came into force a decade ago.
This means that when someone moves jobs, their previous pension contributions will remain with the previous employer’s pension scheme. This pension may then become ‘lost’ if they fail to update their previous employer’s pension scheme with their new contact details. Increasingly individuals are choosing to consolidate their various pension savings into a SIPP (self-invested personal pension) to make pension management more straightforward.
According to Standard Life, the typical British employee will change jobs every five years. This means accruing a large number of separate pension pots. One problem associated with having so many pots is that the money entrusted to them could be underperforming.
According to Jamie Jenkins, Head of Global Savings Policy at Standard Life Aberdeen, workers are “disengaged with details such as how much [their pensions] are worth and where the money is invested.” In research carried out in 2019 by Portafina, it was found that 47 per cent of employees did not understand the auto-enrolment system. One-third of workers could not say when asked, how much they contributed to their pension each month.
Portafina’s managing director said that: “It’s worrying that so many people still don’t understand what a pension is. Auto-enrolment means you will be saving into a pension without having to think about it. Which is great on one hand, but it could mean you have questions about where your money is going or how it is being invested.”
How To Keep Track of Your Pension Savings
Advice by Blacktower Financial Management encourages workers to keep records. Employees should keep a record of their employment history, including all companies they worked with, in addition to documents relating to their retirement plans and benefits.
Employees should remain minded to consider so-called frozen pensions. These pensions are categorised as pensions to which neither the employee nor the relevant previous employer no longer contributes. Money in these funds remains protected and will continue to be accessible. Studies have shown as many as 17 per cent of people forget about old pension plans.
Age UK, one of the UK’s leading charities for the over 60’s, encourages people to track down any lost funds they might have. The charity advises: “It’s important to track down all the different pension schemes you’ve paid into, so you can be sure you’re claiming everything you’re entitled to in retirement.”
Age UK advice for workers changing jobs is that they may: “leave the pension in your old employer’s scheme and access it once you reach the scheme’s pension age. [Or]transfer money to your new workplace pension scheme. This isn’t possible for all schemes, so talk to your pension provider or an independent financial adviser about your options.”
How To Find My Lost Pension
Tracking down a lost pension can be difficult. Over time pension schemes can be renamed, merged or even closed. Because of this, it’s better to locate your lost pension sooner rather than later.
The first step is to be sure your pension is lost. Whether you were automatically enrolled or entitled may depend on the date of your employment. As Moneyhelper.org reports: “You might have a certificate from a pension scheme, but it doesn’t always mean that you have a pension entitlement.”
For workers who left an employer before April 1975, their contributions will likely have been refunded. Workers who left an employer between April 1975 and April 1988, and who were at the time over the age of 26 and had completed five years’ service may have had a pension kept for them. In the event the employee had less than five years of service, the contributions may have been refunded. Employees who left the workplace after April 1988 may be entitled to a pension, provided they completed two years of service.
The deVere Pension Tracker
The quickest way to check for any lost pensions is to use the deVere pension tracker, click on this link to get started.
With just a few details, including your National Insurance number, the deVere pension fund tracker can help you find any lost pension funds you may have.