UK savers have lost track of 1.6 million pension pots, which could be worth £19.4bn in unclaimed savings.
This estimate – which amounts to about £13,000 per lost pot – was made by the Pensions Policy Institute (PPI), which had surveyed firms representing about 50 per cent of the private defined contribution (DC) pensions market.
It had found 800,000 lost pensions worth £9.7bn. The £19.4bn figure represents scaling the numbers to the wider market.
The research, carried out on behalf of the Association of British Insurers (ABI), suggested the numbers could be even higher, because the analysis did not look at lost pensions held in the public sector, or with trust-based schemes typically run by employers.
The ABI recognised insurance providers had made efforts and spend "millions every year" trying to reunite people with lost or forgotten pensions.
In 2017, more than 375,000 attempts were made to contact customers, leading to £1bn in assets being reunited with them, it said.
However, firms are unable to keep pace with a mobile workforce that moves jobs and homes more often than ever before, it added.
People typically lose track of their pensions when changing jobs or moving home. The average person will have about 11 different jobs over their lifetime, and move home eight times, the ABI said.
The government has previously predicted that there could be as many as 50 million dormant and lost pensions by 2050.
According to Yvonne Braun, ABI’s director of long-term savings and protection, the research findings highlighted the "jaw-dropping scale" of the lost pensions problem.
She said: "Unclaimed pensions can make a real difference to millions of savers who have simply lost touch with their pension providers.
"The industry has stepped up its efforts to re-connect savers with their lost nest eggs, developing a new framework launched earlier this year to help pension providers trace ‘gone-away’ customers more consistently.
"But industry efforts can only go so far – we need a radical digital solution to cope with the way society is changing, or the problem will get worse."
Ms Braun said a digital solution such as the pensions dashboard was now more important than ever.
The pension dashboard, which is due to launch in 2019, aims to allow savers to see all of their retirement pots in one place at the same time, giving them a greater awareness of their assets and how to plan for their retirement.
Last month the government said it would let industry take the lead on the project.
It tasked the industry with delivering the dashboard after it had emerged in July that Esther McVey, secretary of state for work and pensions, had made moves to kill off the project, saying the service should not be provided by the state.
FTAdviser reported yesterday (16 October) that the government doesn’t hold information on how much it would cost to deliver the pension dashboard project, or to integrate state pension data onto it.