Billions of pounds of unclaimed retirement cash could be sitting in the accounts of millions of people across the country, analysis indicates.
An estimated £31.1bn is believed to be lying in around 3.29 million unclaimed, inactive or lost pension pots, the Pensions Policy Institute (PPI), an independent research group, found.
It sheds fresh light on the scale of the UK’s lost pension pots problem, with each pot containing an average sum of £9,468.93.
A lost pot is defined by the PPI as one that is managed by a pension provider who is unable to contact the owner. This could mean they have discovered that the details held for the owner are out of date, or they have had no contact from them.
And the issue is getting worse, with the research revealing that the total value of lost pension pots in the UK is believed to have surged by nearly £12bn since 2018.
Auto-enrolment – which ensures workplaces have to enrol workers into pension schemes – and people switching jobs means many employees are likely to end up with multiple pension pots over their lifetime.
Given a career can span four or five decades, you might well lose track of one or more of these over time.
While the average lost pot is worth around £9,470, this rises to £13,620 among people aged 55 to 75, which could be crucial for people approaching retirement.
The PPI surveyed providers making up nearly two-thirds of the market and scaled the findings up to calculate figures for the whole of the UK.
Why is it important to trace lost pension pots?
You can never have too much money in your pension pot and it’s important to know what you could be in line to receive in retirement.
Most pension providers and former employers are obliged to send you a statement setting out an estimate of the income you could receive in retirement annually. If you’re not getting these, perhaps because you’ve changed your address or moved over to a new company, then it’s time to start tracing.
Losing a pension can be expensive – if you never end up claiming it, it could cost you thousands or tens of thousands of pounds.
Where to begin
The first step in trying to reclaim lost pensions is to reach out to your pension providers. Of course, many won’t remember who these are, and so there are other options too.
Becky O’Connor, of PensionBee, told i: “If you can’t remember who the providers were or can’t find any related paperwork, don’t worry – there are still options available. You can start by contacting your previous employers, specifically their HR departments. Provide them with key details, such as your employment dates, your likely pension membership dates, and your national insurance (NI) number.”
Another option is to use the Government’s Pension Tracing Service. This is a free government resource that helps trace providers.
You can fill in an online form, call, or write to them, and they will search their database for the names and contact details of your pension providers, helping you reconnect with your lost pensions.
Several organisations also offer tracing services as well:
The process can be relatively quick and straightforward, according to experts.
Katharine Photiou, managing director of workplace savings at Legal & General, said: “Don’t be spooked by thinking tracing your pensions is a lot of work – just set 30 minutes or an hour aside and list out your previous employers, and when you worked there, if you know that. Most pension providers can help you, and you can use the Government’s free pension tracing service.”
What about if you worked in the public sector?
Public-sector workplaces, such as the NHS, often have their own pension schemes.
These are commonly more generous than private-sector pensions, as they’re usually “defined benefit” schemes. This means instead of being pots of money that you access in retirement, they offer a guaranteed set income each year, for as long as you live.
If you are, or were a teacher, NHS worker, civil servant, or other public-sector professional, you should try to contact the pension provider that ran your scheme.
Major providers include:
NHS:
Teachers:
Civil Service:
Armed Forces:
