Research shows that there is over £19 billion worth of unclaimed pensions in the UK, with this resulting in many people failing to take advantage of their hard-earned retirement income. This article will take a look at some of the most common reasons that pension pots get lost, and how this can be rectified.
Why do pensions get lost?
Pension pots are often lost when people move house and forget to tell their pension provider. According to an article written by The Guardian, the number of homes changing hands in the UK rose to the highest level on record in June 2021 – with 213,120 sales registered by HMRC. With the stress of moving house and all of the paperwork changing hands, many people forget to tell their pension provider that they have changed their address. According to research by The Association of British Insurers (ABI), only 1 in 25 people consider telling their pension provider when they move homes.
Another situation in which people lose track of their pension is when they change their job. Research suggests that the average person has 11 different employers in their lifetime. That’s a lot of potential pension pots! Often, people change their job and forget to tell their pension provider, meaning that they do not take the money already paid into that pension with them to their new employer. Individuals could also lose the information of their previous pension provider, perhaps forgetting who their pension was taken out with by their old employer. According to research published in an article by The Mirror, more than 3.6 million people have lost track of their pensions. This is likely to harm people’s retirement because to reach retirement income goals, people will need to work for longer to make up for lost funds.
Due to auto-enrolment workplace pensions becoming compulsory, employees have to opt-out of their employer’s scheme should they not wish to pay into a workplace pension. Therefore, many people choose to do nothing, contributing to a workplace pension even if they do not see it as a main priority. When people leave a job, they may not take their workplace pension with them, leaving money that they have contributed out of their final pension value.
How can one find lost pension pots?
One way of finding lost pension pots is to sort through old paperwork to find documents that were sent over regarding pensions from their previous employer. These documents will have the information of their previous employers’ pension provider so that one can contact the company to ask for details.
If an employee is unable to find any documents relating to lost pensions, he or she could contact their previous employers to ask for the details of the pension provider that they use. They can then use the details to contact the pension provider directly. If an employee is unsure whether they have paid into a pension scheme with a previous employer, checking their employment history and looking for pension contributions on your previous payslips will help determine if pension contributions were being taken monthly from your salary.
The government’s pension tracing service is a popular way of searching for lost pensions. However, the service will only provide one with the contact details of the previous pension provider. It is then up to the individual to contact them directly. The pension tracing service is not able to tell people whether they have a pension with a particular provider or the value of the pension pot.
Should an individual have previously worked with a financial advisor, they could contact them to see if they still have any records of their pension pots from when they worked with your business. They may be able to tell them the details of their lost pension. Mintago’s pension hunter is an effective and hassle-free way to help your employees find lost pension pots and is free to use with the Mintago package. The tool has a 90% plus success rate and 82% of pensions are found in 15 days. Moreover, the service finds, identifies and obtains the value of the pension before adding it to your employees’ personal Mintago pension dashboard. The pension dashboard allows individuals to keep track of all their pots. Employees can also use the dashboard to plan their retirement and manage their pension contributions.