One in five lose track of a pension pot
Other reasons for losing track of a pension pot include moving jobs a lot. According to research by wealth management group, Tilney, the average person works for six employers by the time they’re 55.
However, this figure is set to rise dramatically as 18-34-year olds have already had, on average, over four jobs.
Estimates by the Department for Work and Pensions (DWP) suggest the average person will have 11 jobs over the course of their working lives.
Given the number of job changes, it’s no wonder nearly one in five admitted to losing track of a pension at some point.
Tilney said one solution to this is to consolidate scattered pensions into one pot so it can be taken from one job to the next, providing an employer is happy to pay into the old scheme rather than its own.
Seven in 10 surveyed said they’d never consolidated pensions – 23% had never thought about it, while 20% don’t know how to do it.
But the research, which polled 1,293 UK adults, also revealed the extent to which people are disengaged with their retirement plans. One in five said they have never checked their current workplace pension, 13% have no idea as to what their pension is worth, and a quarter couldn’t say whether their current pension is a defined contribution or defined benefit scheme.
Further, 47% of men and 62% of women said they don’t know where their pension is invested and 38% don’t even know which company’s managing the plan. A majority, 75%, said they find pension language confusing.
Andy James, head of retirement planning at Tilney, said: “The research shows the worrying level to which the private pensions of millions of Britons are in complete disarray.
“Alongside property, pensions represent one of the largest forms of private wealth in the UK and for most people these are going to be critical in funding their lifestyles in later life. Despite this, many UK adults are not sufficiently in control of these important financial assets, which are often scattered across multiple plans, forgotten about entirely or the paperwork has disappeared down the back of a sofa. This is a problem set to worsen materially as the employment market evolves and people will end up with an increasing number of pension pots.
“Consolidating scattered pension with a single plan can certainly help improve control, providing the new plan offers a wide and flexible choice of investment options. But before transferring a pension it is vital to ensure no hefty penalties will incurred or valuable benefit are lost, so it is really important to take professional financial advice.”
See YourMoney’s VIDEO: Find and consolidate your lost pensions but before taking the leap, also see Why you may want to rethink pension pot consolidation for more information.