Savers have been urged to check whether they are losing any savings through dormant pots after data showed there is £291bn preserved in defined contribution schemes.
Analysis from pension administrator EQ, published today (November 17), found there had been rapid growth in the value of preserved DC pension wealth since auto-enrolment, which has raised concerns about the amount of money held in ‘lost’ pensions.
Latest data from the Office for National Statistics showed that from 2016 to 2018 there was £291bn of capital preserved in DC pensions – a pot where no withdrawals or contributions are made.
This has almost doubled from £139bn in 2012 to 2014, when auto-enrolment had just been introduced.
EQ said while auto-enrolment encourages more people to save, it can also mean workers enter retirement with numerous separate pots from separate employers built up over their working career which are difficult to track.
Research from the Association of British insurers in May found there were about 1.6m pension pots worth £19.4bn which were going unclaimed.
Duncan Watson, chief executive of EQ’s pension business, encouraged savers to check whether they have any savings they are unaware of to help boost their finances.
Mr Watson said: “The sheer scale of preserved DC pension wealth is astonishing – it is around £65bn more than the value of DC pots that people are currently paying in to.
“Of course, not all of this £291bn figure is forgotten pensions: it is common for people to save into a pension and then not touch it for years or even decades given they are long-term investments. Many of those with more than one pot will also be well aware of where their money is kept and how to access it when the time comes.
“However, it is also the case that lots of people – especially as they get older and potentially accumulate more than two or three pension pots – can lose track of their pension savings.
“It can be difficult knowing who to talk to so that these savings can be relocated especially if the amount of money is unlikely to make a tangible difference to their quality of life.”
The government predicts that there could be as many as 50m dormant and lost pensions by 2050.
In 2017 more than 375,000 attempts were made to contact customers, leading to £1bn in assets being reunited with them.
Consolidator PensionBee has previously predicted that the impact of the coronavirus pandemic on the UK labour market will cause a 32 per cent increase in the number of dormant pension pots in 2020.
Its analysis found that the number of lost pensions would increase from an estimated 16.3m in 2019 to 21.5m in 2020.
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