In retirement, every penny matters and Brits can’t afford to overlook the estimated £13,000 that an average person is likely to miss out on by the time they reach pension age.
A staggering number of Brits are unaware that they’re missing out on some of their hard-earned pension funds. The Pensions Policy Institute estimated in 2022 that nearly 3 million pots could be considered lost as their rightful owners had not yet claimed them.
This often happens when people move house and forget to update their addresses, change jobs or switch careers, ending up with multiple pension pots from different employers. Some may think that their small pension pot isn’t worth the hassle of transferring to their new workplace pension when they change jobs.
However, given the way pensions are invested, over a long enough period, these unclaimed pots could result in workers losing thousands.
Late last year, the Association of British Insurers estimated that approximately £19.4 billion was tucked away in 1.6 million lost pension pots, with the average owner of these savings missing out on a substantial £13,000. But how do you locate your lost pension pots, especially if you’re not even aware they exist?
One reader of This Is Money wrote to the experts about their predicament. They remembered having a small pension with a company they worked for in the mid-1980s.
Despite their best efforts to find the pot, they encountered several obstacles, including the fact that the business had since changed its name and the insurance company it had used was no longer in operation.
Pensions expert Steve Webb managed to locate a lost pension after nearly a year of searching, and shared some valuable tips he picked up during the process. He pointed out that a simple typo had significantly delayed the discovery of the pension pot.
The pension was registered under Mr E Spence, while the actual owner was Mrs E Spence. As a result, Webb advised those searching for their pensions not to accept ‘no’ as an answer if administrators are only looking by name.
Instead, he advised they can also request a search based on details such as date of birth or employment period. However, this advice is only applicable if you know you have a missing pension pot. M&G Wealth suggested that if you’re unsure whether you’re missing funds, you can start your search by going through your CV.
Contacting previous employers or pension providers can be one of the easiest ways to locate and reclaim lost pension pots. Especially since, as the firm highlighted, some pension schemes offer benefits that don’t require employee contributions, so they might not appear on your payslip.
Moneyhelper provides a guide and template letter that individuals can use to reach out to their former employers, explaining the situation and outlining what information they should provide and ask for. Additionally, the government’s free Pension Tracing Service can assist in finding the contact details of workplace and personal pension schemes.
