A survey of almost ten thousand people who hold a pension has revealed that just under one in eight (12.5%) admitted they have at least one pension that they had forgotten about 1. This could equate to more than 2.3 million pension policies currently sitting in the back of people’s minds 2.
Among those with a forgotten pension, the majority believe they have misplaced at least one pension pot, while some believe they could have three or more 3.
According to Government figures, there is an estimated £400m in unclaimed pension savings 4. At the same time, almost three in five UK adults are worried about not having enough money to last them in retirement 3.
Although tracking down a lost pension can provide a valuable boost to retirement income, those who delay could receive a smaller amount than expected. As a forgotten pension would still be subject to charges and as no contributions are being made into it this could have an impact on the pension pot value. In addition, the pension pot may no longer be invested in the most suitable investment option if your personal circumstances have changed.
It’s unsurprising that so many people have pensions they have forgotten about. The ‘job for life’ is now a distant memory with people much more likely to change employer on a regular basis. With auto-enrolment doing such a great job of getting more people saving for retirement, we are likely to see the number of pension pots that people hold increase further as each time a person gets a new job they get a new workplace pension.
People need to be aware of the potential risks of having a number of different pension pots with small amounts of money in each. It’s likely that there will still be charges taken out of those pots for their management and administration and that can have implications if you are no longer contributing into them.
If you think you may have a pension with a previous employer, contact them, or if you are unsure, visit the Government's pension tracing service here.