The Pensions Policy Institute has called on savers to take action to reclaim over £26 billion in lost pensions.
New figures from the PPI revealed that the total value of lost pension pots has jumped by £7.2 billion over the last four years, from £19.4 billion in 2018 to £26.6 billion in 2022.
In a briefing note sponsored by the Association of British Insurers and Punter Southall Aspire, the research group said over 2.8 million pension pots are now considered lost, an increase of 75% over the last four years.
The average lost pot is worth £9,470, which the group said could make a “real difference” to people’s retirement.
The PPI said that despite action by the pensions industry to connect people with their pensions, problems occur when people forget about pots from previous jobs, change name or move house.
Tom Selby, head of retirement at AJ Bell, said the success of auto-enrolment over the past decade has exacerbated the issue of lost pensions.
Selby said: “The pandemic is likely to have spurred an acceleration in career moves over the last few years, driving a surge in the value of lost pensions. There is also some evidence that more people have been moving house since 2018, which is another key reason why people lose touch with their pensions.
“The average lost pension is estimated to be worth well over £9,000 – not the sort of money you would normally find down the back of the sofa.
“Ensuring pensions are easy to track and combine is absolutely crucial if we are to ensure more people make the most of their hard earned retirement pot.”
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “The number of lost pensions is growing at an alarming rate and risks undermining our retirement planning.
“The average amount in lost pensions may not sound like a lot but over time investment growth can add up to a tidy sum and if you lose track of more than one pension it can have a major impact on retirement planning decisions. Finding a lost pension could be the difference between struggling to make ends meet or being a bit more comfortable in retirement.”
The introduction of pensions dashboards is widely expected to make it easier for savers to locate old pots and boost engagement with retirement saving.
Anthony Rafferty, CEO of Origo, commented: “The value of lost pensions shows the very real need for pensions dashboards which will enable pension holders to identify and see their pension policy data.
“The current cost of living crisis has brought home the importance of financial planning and long term savings. Having pensions information at their fingertips can only drive up pension holders’ engagement with their savings and help them make more informed decisions around their financial planning, in turn improving financial well-being in the UK.”
Rafferty added: “The next stage of the dashboard technology journey is for pension providers, schemes and third party administrators to decide how they will connect to the dashboard which for most will be via an integrated service provider.”
