Approximately 1.6 million “lost” pensions worth nearly £20 billion remain unclaimed in the UK, according to a report from the Association of British Insurers (ABI)
The figures come from the Pensions Policy Institute (PPI), which surveyed firms representing approximately 50% of the private defined contribution pensions market in the UK. PPI found 800,000 lost pensions worth approximately £9.7 billion, and scaled it to the whole market, which translates to 1.6 million unclaimed pensions worth £19.4 billion—the equivalent of nearly £13,000 per person.
“These findings highlight the jaw-dropping scale of the lost pensions problem,” said Yvonne Braun, ABI’s director of long-term savings and protection, said in a release. “Unclaimed pensions can make a real difference to millions of savers who have simply lost touch with their pension providers.”
And the ABI says those figures are likely to be even higher because their research did not look into lost pensions held in the public sector or held with trust-based plans typically run by employers.
The two main reasons people lose track of one or more of their pensions are from moving jobs, and moving to a new home, said ABI. According to the report, more than 375,000 attempts were made to contact people with lost pensions in 2017, leading to £1 billion in assets being reunited with their retirement plans. However, ABI said firms are unable to keep pace with a mobile workforce that moves jobs and homes often.
Nearly two-thirds of UK savers have more than one pension, according to ABI, and the average Briton will have approximately 11 different jobs over their lifetime, while moving eight times. The government predicts that there could be as many as 50 million dormant and lost pensions by 2050.
The report also said that younger generations are likely to move more frequently than older generations, and as a result are more likely to lose contact with their pension provider, particularly in the case of workplace pension plans for which they may have also left the associated employer.
Braun said that to help prevent lost pensions, it is important for the UK government to roll out its proposed online Pensions Dashboard, which would allow savers to see all of their pension funds in one place.
“The industry has stepped up its efforts to re-connect savers with their lost nest eggs, but industry efforts can only go so far,” said Braun. “We need a radical digital solution to cope with the way society is changing, or the problem will get worse.”
Tags: Association of British Insurers, Pension, Pensions Policy Institute, UK