There are now over three million ‘lost’ pensions worth over £31 billion.
We all lose things, be it the proverbial change down the back of the sofa or TV remote. But how do you lose a pension? The answer is very easy as suggested by recent research from the Pensions Policy Institute (PPI).
The PPI counts a pension as ‘lost’ if the pension’s administrator is unable to contact the pension owner. While the definition of uncontactable varies between administrators, it will generally involve not having heard from the owner within a certain time or discovering that the owner’s details on file are out of date, so the provider is unable to contact them.
The number of lost pensions has more than doubled in the past six years. When the PPI first made its count in 2018, there were 1.62 million misplaced pensions; by 2024 the figure was 3.29 million. Ironically, the burgeoning lost pension population is a symptom of the success of automatic enrolment in workplace pensions, which was introduced 12 years ago. Since then, over 11 million people have been enrolled in workplace pensions, many of whom had started retirement saving for the first time in their lives. However, as people move between jobs, they are automatically enrolled by their new employer in a new pension scheme under current legislation. The turnover of employment associated with the pandemic aggravated this situation.
In 2024, the average size of a lost pension is £9,470, the same as in 2022, but down from £12,670 in 2018. Perhaps surprisingly, it is those of prime retirement age (between 55 to 74 years) who have lost the largest pension pots, worth on average £13,620. At current annuity rates that could provide a 65-year-old with a fixed income of about £1,000 a year.
If you think you have lost a pension somewhere, your starting point is the government’s pension-tracing service at https://www.gov.uk/find-pension-contact-details. You will need either the name of your (former) employer or your pension provider. If you do find a lost pension, do not rush to consolidate it into your current plan – take advice first.
The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested.
Occupational pension schemes are regulated by The Pensions Regulator.
To discuss your financial planning, contact our Sheffield based Financial Advisers on 0114 266 4432 or info@smh.group
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