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How to find your retirement cash as value of lost pensions rises to almost £27bn

Rebecca Goodman
Written By:
Rebecca Goodman

The value of lost pension pots has risen £7bn in four years to a total of £26.6bn, data reveals.

With 2.8 million lost pensions, a rise from 1.6 million – or 75% – in four years, savers are being encouraged to take action to trace lost retirement money.

These so called ‘lost’ pensions have an average value of £9,470, which could make a significant difference to a retirement income, especially in the cost-of-living crisis.

A lost pension pot is an account in which the owner has lost contact with their pension provider.

This could be because they’ve switched jobs, changed their name or moved home and forgotten about a pension and not told their pension provider.

The provider is then unable to contact the person, and the pension becomes ‘lost’.

Since 2018 the value of lost pensions has risen by 37%, from £19.4bn to £26.6bn, according to the Pensions Policy Institute (PPI) who carried out the research.

The pandemic has exacerbated the issue

The PPI says it has seen an increase in people moving homes and jobs since the start of the coronavirus pandemic which has exacerbated the issue.

It says just one in 25 people will instinctively think to tell their pension provider if they move home, compared to 85% who would tell their GP or dentist.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “The pandemic has acted as an accelerant to the trend, with more people shifting jobs and we now have an estimated £26.6bn in lost pension money in the system.

“The average amount in lost pensions is just over £9,400 – this may not sound like a lot but over time investment growth can add up to a tidy sum and if you lose track of more than one pension, it can have a major impact on retirement planning decisions.”

The research comes ahead of National Pension Tracing Day on Sunday.

The pension sector also recently launched a three-year ‘Pension Attention’ campaign to reach those which don’t usually engage with pension providers. It is being led by the Association of British Insurers (ABI) and the Pensions and Lifetime Savings Association (PLSA).

Free pension tracing service

When the Pensions Dashboard is working, it should eradicate the problem of lost pensions as savers will be able to access all their retirement pots in one place but until then there are other ways to locate old pots.

It’s free to trace an old pension, via the government’s free Pensions Tracing Service. You will need either the name of the pension, the provider, or the company you worked for.

You could also ask your employer (current or previous) for details about a private pension.

If you have regularly paid into a pension, there should also be a payment recorded on your bank statement.

You may also have paperwork, either physical or an online copy, from your pension provider.

It should be able to give you the details of any pensions held. Your pension provider can also give you an estimate of how much your pension is worth, both now and at the point when you plan to retire.

It’s time to pay your pension some attention

Yvonne Braun, director of policy, long‑term savings and protection, at the ABI, said: “The amount of money in lost pension pots has increased by 37% to £26.6 billion in recent years, with people missing out on money that can make a real difference to their quality of life in retirement.

“It’s time to pay your pension some attention and use the resources available to track down any lost pots.

“It only takes a short amount of time to check what money you have built up and keep your records up to date.”

Half of savers have no idea how many pension pots they hold

Separate research from Scottish Widows shows that 46% of workplace pension holders have no idea how many pension pots they hold with previous employers.

Of those with a lot of pensions, 14% said they had not looked into it and 13% said they didn’t know how to.

Robert Cochran, senior corporate pension specialist at Scottish Widows, said: “The latest statistics tell us that millions of workers run the risk of short-changing themselves and being unable to plan properly for their retirement, as they lose track of pension pots from previous employers.”