How to help your clients find lost pensions

Pension engagement – or a lack of it – is a pressing issue in the UK. While it is nothing new, many people are problematically passive when it comes to saving for their own retirement.

This is not their fault. Typically, an individual is enrolled in a workplace pension scheme, but loses track of their different pension pots as they change employers over the course of their professional lives. 

Research has exposed the extent of the problem over recent years.

Analysis conducted by Hargreaves Lansdown revealed that 200,000 people have contacted the Department of Work and Pensions over the previous four years to ask for assistance in tracking down lost pensions. Clearly there is an issue.

Worse still, experts anticipate that there is currently an estimated £20bn in lost pensions waiting to be claimed.

Clearly, the pension market is rather opaque, leaving savers in the dark about how much they have tucked away – for many, this only becomes apparent as they advance through their 40s and 50s, when retirement becomes a more critical focus.

The process is time-consuming and fiddly.

Unfortunately, it is too late by then; waiting until retirement is looming to then consider how best to prepare financially will likely mean a saver has missed out on better managing their pension pots to ensure maximum returns. 

More ought to be done to help people find and manage their pension pots. Indeed, there are people across the UK who have, quite literally, thousands of pounds saved in a pension that they are either not aware of, or unable to hunt down. 

It is an issue that has become more acute during the pandemic – the temporary suspension of the triple lock, the capping of the lifetime allowance, and constant uncertainty surrounding the sustainability of pension tax relief have all caused saver confidence to plummet.

What’s more, the almost inevitable rise in interest rates that lies on the horizon, coupled with the National Insurance hike coming into effect in April 2022 to help pay towards social care, both serve only to heighten the urgency for savers to take control of their financial situation.

All of this places a heavy burden on advisers. After all, as they work to secure the best possible financial outcomes for their clients, they must first establish the exact value of their existing investments and savings.

However, this is only possible if they can locate the whereabouts and value of a client’s pensions.

Out of sight, out of mind?

What’s driving this lack of engagement?