Around three million UK pension pots are believed to be ‘lost’, according to the Pensions Policy Institute.
The findings, published in the PPI’s ‘Lost Pensions: The scale of the challenge’ survey, show lost pots contain £18.7 billion in pension assets, with the average lost pension worth £6,220.
According to the report, the vast majority of lost pension pots belong to people aged under 55, with this group responsible for £12.9 billion in lost pensions.
Meanwhile, those aged between 55 and 74 were found to have £5.75 billion in lost pensions.
The average lost pension size for under 55s is £5,250. This more than doubles to £10,710 for those aged between 55 and 74.
The PPI said the larger proportion of lost pots for under 55s reflects higher job mobility, address changes and the accumulation of multiple small pots under automatic enrolment. It warned that structural factors, including automatic enrolment, job changes, longer working lives and possible future expansion of pension saving means that new lost pensions will continue to be created without further intervention.
While Pensions Dashboards and further small pots consolidation both have the potential to reduce the lost pensions challenge, the PPI said their full impact is likely to take time.
Tom Selby, public policy director at AJ Bell, said: “Policymakers haven’t found any real answers to the challenge of lost pension pots, with Pension Dashboards languishing on the political to-do list for what feels like eons and proposals like ‘pot follows member’ never making meaningful headway.
“Particularly striking is the fact that the vast majority of lost pensions are held by people under 55. Retirement may still feel like it is a long way off in your mid 50s but keeping track of your pensions is one of the most important steps you can take to stay in control of your long-term finances.
“Government continues to work on delivering Pension Dashboards, which has the potential to be transformative when it arrives but the Dashboard will be limited and people don’t need to wait. Services such as the government’s Pension Tracing Service and the pension finding tools available from AJ Bell and other providers can already help reunite people with lost pension pots and make it easier to take charge of retirement savings.”
Main image: hennie-stander-AALupmpUC64-unsplash
