UK workers risk losing over £50 billion in pensions due to the proliferation of smaller multiple accounts, according to new analysis by the Centre for Economics and Business Research for PensionBee.
In 2023, 4.8 million pensions were deemed “lost,” with around 10 per cent of employees understood to have lost pensions worth £10k or more.
The issue looks set to worsen with the total number of pension pots in the UK expected to increase by 130 per cent by 2050, mostly as a result of auto-enrolment and a more fluid job market for younger people.
Younger UK workers have an average of 2.4 pensions compared to 2.1 for mid-career workers and 1.7 for older workers, despite their shorter career history.
Workers under 35 are forecast to accumulate an average of five pension pots by age 68, with some amassing over 20. They are also more likely to believe they’ve lost a pension, at 25 per cent, compared to mid-career workers at 17 per cent and older workers at 8 per cent.
Smaller pots, valued under £10,000, are more frequently misplaced, reported by 13 per cent of UK workers, compared to 9 per cent for 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 says: “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.”