Over £50bn of retirement savings is at risk of being ‘lost’, due to the proliferation of multiple pension pots according to analysis by the Centre for Economics and Business Research.
The research, conducted for PensionBee, estimates there were at least least 4.8 million ‘lost’ pension pots in 2023, with almost 1 in 10 workers saying they could have lost a pension pot worth £10,000 or more.
This issue is expected to get worse, with the number of pensions pots forecast to rise 130 per cent, from 106m at present to 243m by 2050. This is due increased participation in pensions via auto-enrolment, and more frequent job switching among younger workers
According to the research workers under 35 have accrued more pensions than older workers, despite a shorter career history. It shows those aged under 35 have an average of 2.4 pensions, those aged 35 to 55 have an average of 2.1 pensions, while those aged 55 plus have an average of 1.7 pensions.
Meanwhile, those aged 18 today are forecast to accrue on average, five pension pots by the age of 68. However PensionsBee says figures suggest that some people accumulate more than twenty separate pensions over a working lifetime.
Younger workers were more likely to believe they had lost a pension pot than compared to mid-career or older workers. Not surprisingly, PensionBee’s research also found that smaller pots, defined as being worth less than £10,000, are more likely to be ‘lost’ than larger ones.
PensionBee director of public affairs Becky O’Connor says: “The amount of money lost track of in old pensions is already eye-watering, with more than £50 billion already at risk of being left behind, but is set to reach national crisis levels over the coming years, as the number of pots accumulated through work rises and with it, the number of lost pensions.
This research suggests the problem of lost pots is growing more urgent every year. The Government is working on a number of solutions to help solve it, including pension dashboards and new ‘pot for life’ proposals.
“For anyone who loses track of pensions, the result can, unfortunately, be a poorer retirement. It’s important to keep track of old paperwork, employer and pension provider names and policy numbers and if you would prefer to keep pensions together, consider consolidating them in one place.”
CEBR head of economic insight Christopher Breen adds: “Younger people are moving jobs more frequently than was the case for previous generations. While people tend to switch employers less frequently as they get older, this will still lead to a higher number of pensions being accrued. This is before accounting for the role of auto enrolment.
Given this trend, it’s important that the government provides the necessary support and guidance for people to manage their pensions efficiently. With a rapidly ageing population, a healthy private pension system is vital for the long-term sustainability of public finances.”
