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UK's 'lost' pensions could be worth £20bn

Nearly two-thirds of UK savers have more than one pension, and changing work patterns means that the number of people with multiple pensions will increase.

However, people can sometimes lose track of their pension savings, especially if they change jobs or move home several times.

New research shows the scale of the problem, with almost £20bn in pension savings potentially going unclaimed.

The Pensions Policy Institute (PPI) surveyed firms representing about 50% of the private defined contribution pensions market, uncovering 800,000 lost pensions worth an estimated £9.7bn.

If scaled up to the whole market, this means that there could be around 1.6 million pots worth £19.4bn unclaimed — the equivalent of nearly £13,000 per pot.

What’s more, the true figure is likely to be even higher as the research did not look into lost pensions held in the public sector, or with trust-based schemes typically run by employers, the Association of British Insurers (ABI) noted.

Insurance providers make considerable efforts trying to reunite people with lost or forgotten pensions. Last year, more than 375,000 attempts were made to contact customers, leading to £1bn in assets being reunited with them. However, with firms unable to keep pace with a mobile workforce that moves jobs and homes more often than ever before, the ABI said that the proposed Pensions Dashboard would go a long way towards solving the problem.

An online dashboard would enable anyone to see all their pension savings, including the State Pension, together in a single online place.

“Unclaimed pensions can make a real difference to millions of savers who have simply lost touch with their pension providers,” said Dr Yvonne Braun, ABI’s director of long-term savings and protection.

“The industry has stepped up its efforts to reconnect savers with their lost nest eggs, developing a new framework launched earlier this year to help pension providers trace ‘gone-away’ customers more consistently. But industry efforts can only go so far — we need a radical digital solution to cope with the way society is changing, or the problem will get worse.

“It is important that the government stands by its promises to take forward the Pensions Dashboard. This project has cross-party support, with the backing of consumer groups, and could mean a more secure retirement for millions of savers.”

Posted on October 17th 2018

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