The number of dormant pensions is set to soar as a result of the Covid-19 pandemic, PensionBee has warned.
According to research from the pension consolidator, pension pots left behind by savers will rise from an estimated 16.3 million in 2019 to over 21.5 million in 2020.
Defined contribution pensions are the fastest growing type of dormant pension, with an expected increase of 48% from 10.2 million pots in 2019 to 15.1 million this year.
The Bank of England has forecast that the unemployment rate will increase form around 4% to 9% due to the impact of the Covid-19 pandemic. Combined with regular job-switching and career changes as the economy undergoes a transformation, it is likely that many more savers will abandon their pension pots unless they take action to consolidate, PensionBee said.
Romi Savova, chief executive, PensionBee (pictured), commented: “As the UK economy transforms in the wake of Covid-19, changes to the labour market will be inevitable. While the reality is that individuals can’t control the labour market, one thing that is within their control is their pension.
“It might not be the first thing that people think about when leaving or changing jobs, but it should be up there on the list of priorities. As the research shows, the likelihood of people losing or abandoning their pension pots when they leave jobs is even greater. It’s important to find out where your pension is and consider if consolidating your pots is the right decision for you.”
PensionBee recorded a 24% year-on-year increase in first-time pension transfers for the month of April, which it said indicated that many consumers are using their time during lockdown to sort out their finances and consolidate old pension pots.
