One in five Brits has lost pension pot

One in five Brits has lost pension pot

One in five people with multiple pensions has lost track of at least one of them, research by Aegon has revealed.

The life company estimated the total number of people in the UK with a lost pension is 6.6 million.

The survey, which covered more than 1,000 people, found that 62 per cent had more than one pension pot.

Of those people, 21 per cent reported they had lost track of some or all of those pension pots.

Two out of five respondents, meanwhile, said they did not know the total value of their pots.

Despite these apparent signs of disengagement, the survey also uncovered strong support for consolidation, with the majority (67 per cent) saying they would put their disparate pots into a single pension if there were "financial benefits". 

Aegon linked the high number of people with multiple pots to increasing worker mobility, pointing out that on average people switch employers 11 times in their life.

Kate Smith, head of pensions at Aegon, said the introduction of auto-enrolment in 2012 had increased the number of pension savers by seven million.

"As a result, a majority of people now have more than one pension but it is a concern to find that 21 per cent of these people have lost track of some of their savings," she said. 

"It’s very hard to plan your retirement without a full view of your savings and it’s important everyone has a clear idea of how much their pension is worth and what their state pension entitlement is likely to be.”

Ms Smith said some pensions had less competitive charging structures than others, meaning there was already a financial incentive to consolidate.

However, she said it was often a complicated calculation for an individual to make without the help of an adviser.

“Looking to the future, the launch of a pension dashboard in 2019 should simplify the process of finding lost pensions, and has the additional bonus of seeing all your pensions, including the State pension, in one place," she said, adding that people should also make use of the government's pension tracing service service.

Under auto-enrolment rules, members are automatically signed up to their employer's chosen workplace pension scheme. If they want the employer's contribution (currently a minimum of 1 per cent of earnings), they cannot opt to channel the payments into an alternative scheme.

That means whenever someone switches jobs, the chances are they will automatically open up a new pensions scheme.

FTAdviser recently revealed that almost half of the accounts held with AE providers The People's Pension and Nest were inactive - in most cases because members had moved to a new job.

During the Conservative-Liberal Democrat Coalition, then-pensions minister Steve Webb had advocated a "pot-follows-member" policy, whereby members' pension pots worth less than £10,000 would automatically follow members to their new job.

This was shelved following the 2015 election, when the Conservatives won a majority, and since then no alternative has been proposed.