Millions of individuals in the United Kingdom may be unaware of forgotten pension pots that could be worth thousands of pounds, according to recent analyses. Savers have lost track of an estimated 3.3 million pensions, totaling a staggering £31.1 billion.
One individual, Paul Haresnape, discovered a pension from the late 1980s that had grown from an initial £2,000 to £25,000. This unexpected windfall allowed him to leave his job as an educational support worker and pursue a career as a youth and young offender mentor, moving closer to family.
Analysis by wealth management platform Moneybox suggests that workers across the UK could be missing approximately £38,000 on average in forgotten pensions. The study highlights a disconnect between the number of employers people have had and the number of pension pots they believe they have accumulated. This indicates that many individuals may have lost touch with workplace pensions over time.
People in Wales appear to be the most affected, potentially misplacing an average of four pension pots, worth up to £37,880. Other regions with significant numbers of lost savings include the South East, South West, Scotland, Northern Ireland, North East, East of England, and West Midlands, where individuals may be missing three pots averaging £28,410. London, the North West, East Midlands, and Yorkshire and the Humber could be missing around two pots each, valued at £18,940 on average.
Brian Byrnes of Moneybox emphasized that even small individual pots can accumulate to significant sums, and tracking down old pensions is a straightforward action to improve one's long-term financial future.
Finding Lost Pensions
Sir Steve Webb, former pensions minister and partner at consultancy LCP, has outlined a five-step guide to help individuals locate their lost pensions:
Start with Paperwork
The initial step involves searching for any official paperwork related to pensions. This documentation may contain crucial details such as policy numbers, which greatly assist in tracing lost funds. It is advisable to keep all correspondence regarding pensions, whether in physical or electronic form, noting down websites and login details.
Investigate Former Employers
If no documents are available, the next step is to determine the status of former employers. Checking Companies House, a free online database of UK-registered businesses, can provide information on whether a company is still trading or has changed its name. This information can then be used to contact the employer for details about past pension schemes.
For those who paid into 'contracted out' pension schemes, where reduced National Insurance contributions were redirected into a company pension, HMRC may hold scheme reference numbers and names that can be used to claim the pot.
Utilize Government Services
If information about former employers cannot be found, the Government's Pension Tracing Service, available at gov.uk/find-pension-contact-details, can provide contact details for thousands of pension schemes, trustees, or administrators. This service primarily helps in tracing pension administration firms.
It is important to note that if the Pension Tracing Service does not have information, it does not necessarily mean the pension does not exist. Employers may have changed names, gone out of business, or the pension may be of a type not tracked by the service.
Follow the Money
Pension funds are typically managed separately from employers by specialist pension providers or insurance companies. Individuals can check if their pension provider has been taken over by another business. The Association of British Insurers (ABI) provides an A-Z list of insurance companies and their historical name changes.
For older 'defined benefit' pensions where the former employer has gone bankrupt, the Pension Protection Fund (PPF) may cover the scheme. The PPF's website lists schemes it covers.
Leverage Personal Networks
Reaching out to former colleagues can also be effective. A former colleague might be receiving a pension from the same scheme and could provide contact details. Social media platforms, such as LinkedIn, can also be used to track down former work associates. Some larger companies also have organizations for retired employees, whose members may possess valuable knowledge about past pension arrangements.