The UK is sitting on a “lost pensions mountain” worth nearly £20 billion, according to estimates from an insurance industry body.
Research from the Association of British Insurers (ABI) found 800,000 lost pensions worth an estimated £9.7 billion.
When scaled up for the wider market, this equates to a staggering 1.6 million pension pots worth £19.4 billion unclaimed – the equivalent of £13,000 per pot.
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The research, carried out by the Pensions Policy Institute on behalf of the ABI, looked at half of the private defined contribution pensions market.
Worryingly, the ABI says this figure is likely to be even higher as the research did not look into lost pensions held in the public sector, or with trust-based schemes typically run by employers.
The body says insurance providers make considerable efforts and spend millions every year trying to reunite people with lost or forgotten pensions.
In 2017, there were more than 375,000 attempts made to contact customers, leading to £1 billion in assets being reunited with them.
However, the ABI says that as people are frequently moving jobs and homes a pensions dashboard that would enable anyone to see all their pension savings in one place online is more important than ever before.
The pensions dashboard was supposed to launch in 2019. Despite widespread speculation earlier this year that the pensions dashboard could be scrapped, the government said it was still committed to it as long as the industry takes control of the initiative.
People are losing track of their pensions when changing jobs or moving home.
The average person has around 11 different jobs over their lifetime and moves home eight times.
The government predicts that there could be as many as 50 million dormant and lost pensions by 2050.
Yvonne Braun, the ABI’s director of long-term savings and protection, says: “These findings highlight the jaw-dropping scale of the lost pensions problem. Unclaimed pensions can make a real difference to millions of savers who have simply lost touch with their pension providers.
“The industry has stepped up its efforts to re-connect savers with their lost nest eggs, developing a new framework launched earlier this year to help pension providers trace ‘gone-away’ customers more consistently. But industry efforts can only go so far – we need a radical digital solution to cope with the way society is changing, or the problem will get worse."
She adds: “It is important that the Government stands by its promises to take forward the pensions dashboard. This project has cross-party support, with the backing of consumer groups, and could mean a more secure retirement for millions of savers.”
How to track your pensions down
When planning for retirement you need to know how much income you will be receiving from all of your pensions.
For people who lose track of their pensions all is not lost as the government provides a free online pensions service which allows you to search for lost workplace pensions.
All you need is the name of an employer or a pension provider to use the service.
Alternatively, you can contact the Pension Tracing Service by post or your former employer.
When you have tracked down all your funds you can then consider combining your pensions into a single plan to make them easier to manage and to reduce fees.
Jon Greer, head of retirement policy at Quilter, says: “The PPI statistics highlight why the pension dashboard should not be placed on the backburner. This is not a project that can be handed off to the private sector without consequences.
“It is and must be the government’s responsibility to ensure that the dashboard is governed appropriately and includes state and public sector pensions. Industry can only do so much and to get backing and confidence from the public it will need an unbiased seal of approval.”
He adds: “These figures are really symptoms of a worrying epidemic: a lack of engagement with money. Boosting the nation’s engagement with savings and money needs to be a top priority or these problems will not go anywhere.”