More than one in five (21%) people have lost track of a pension, new research from Hargreaves Lansdown has revealed, while a further 18% are unsure.
Losing track of a pension can mean savers are potentially losing out on thousands of pounds that could be used towards retirement, the investment platform warned.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “If you’ve worked for a few different companies during your career then the chances are you have lost track of a pension. It’s easily done, but it can have a major impact on your retirement planning. Even the smallest of pensions can grow over time and that pension you paid into a decade or more ago could well have grown a decent amount.”
As an example, Hargreaves Lansdown said a £10,000 pension pot would be worth more than £16,400 after ten years if it grew at 5% per year.
Morrissey said people concerned about losing track of a pension should contact the Government’s Pension Tracing Helpline. Once pensions are tracked down, people have the option to consolidate them, which can cut down on time, admin and fees and could lead to better retirement decisions.
“If you have three small pension pots you may be tempted to take them as cash and spend them. However, if they are consolidated into one pot then you are less likely to do this,” she added.
However, there are several factors to consider before consolidating, including whether it is beneficial to transfer a defined benefit pension due to the valuable guarantees in place; the potential for expensive exit fees and whether the pension plan contains benefits such as guaranteed annuity rates that would be lost by consolidating.
