The Association of British Insurers (ABI) estimates that more than 1.6 million pension pots worth £19.4 billion, which is equivalent to £13,000 per person on average, are “lost”.
Pension pots can be ‘lost’ when an employee moves jobs and ends their membership of that particular workplace pension scheme. The money in the pots can usually be transferred to a new workplace pension scheme pot, but in many cases, workers neglect to do this, and so the money is left where it is.
Many industry professionals believe that this situation is likely to get worse, as they believe that the era of ‘jobs for life’ is over and employees could have up to 11 different jobs during their working life.
Moreover, as the Government is now making employers offer company pensions to their workers, the UK could soon be “awash with millions of stranded pensions”. Since auto-enrolment started in 2012, more than 10 million people have enrolled in a scheme for the first time.
The ABI is now flagging this as a problem waiting to happen, with a spokesman saying that although many workers are now saving, a lot of savers are disengaged and do not know how much their pension is worth or where it is stored.
However, all is not necessarily lost, as the Government is going to bring out a ‘pensions dashboard’, which will help workers to find their pension schemes.
The implementation of the dashboard will mean that pension providers will have to make consumers’ data available through a single portal, and consumers will be able to see how much they have saved.
However, this could take up to four years to finalise, so in the meantime, if workers can try to keep a record of their savings in one place, it will make it easier for them to keep an eye on where all that saved money is.