One in five UK adults have lost track of a pension

New research by wealth management group Tilney reveals the extent to which many peoples’ retirement preparations are in disarray, with nearly one in five UK adults admitting they have lost track of at least one pension pot.

This is a problem exacerbated by changes in the employment market with few people now sticking to one job for life, meaning most of us end up with multiple pension plans. According to Tilney’s research, the average person has worked for 5.8 employers by the time they are over 55 but this is set to rise significantly as 18-34 year olds have already had, on average, over 4 jobs and even small businesses are now required under law to auto-enrol new staff into a workplace pension. Projections by the Department of Work & Pensions estimate that the average person will have 11 employers over their working lives.

Tilney’s research has found that nearly 1 in 5 admit they have lost track of a pension at some point, the main reasons being they have “never kept an interest”, “lost paperwork” or “forgotten to notify providers of address changes”. Of those who have moved home, 13% admit they have never notified their pension providers of their change of address and a further 12% confess they are unsure. When asked how they would go about finding a lost pension, most (32%) would contact their previous employer but a fifth (20%) said they would have no idea how to find it.

One solution to this mess would be to consolidate scattered pensions into a single plan. This allows for simpler administration and oversight and the pension could then be taken from job to job, providing the employer agrees to pay into the scheme instead of their own. Most individuals (72%) have never consolidated plans and the key reasons people are they’ve never thought about it (23%) and don’t know how (20%).

The research also highlights just how disengaged much of the British public are with their retirement plans, despite the importance these assets are going to be in financing their future lifestyles. One in five respondents admit they have never checked their current workplace pension, 13% have no idea as to what their pension is worth, and a quarter of those asked were unable to differentiate whether their current pension is a defined contribution or defined benefit scheme.

Further, 47% of men and 62% of women with pension plans admit they do not know where their pension is invested and 38% don’t even know which company are managing their current plan. 62% have no idea what the annual pension allowance is, while 67% admit they find the language of pensions confusing – especially women (75%).

Andy James, Head of Retirement planning at Tilney, commented: “The research shows the worrying level to which the private pensions of millions of Britons are in complete disarray. Alongside property, pensions represent one of the largest forms of private wealth in the UK and for most people these are going to be critical in funding their lifestyles in later life. Despite this, many UK adults are not sufficiently in control of these important financial assets, which are often scattered across multiple plans, forgotten about entirely or the paperwork has disappeared down the back of a sofa. This is a problem set to worsen materially as the employment market evolves and people will end up with an increasing number of pension pots.

“It is all too easy to lose track of a pension due to a combination of inertia, disinterest fuelled by excessive technical jargon and absent minded administration. Tracking down missing workplace pensions can be particularly problematic where a previous employer from many years past has been acquired or gone bust, moved or re-branded. But it really is vital to track down these pots of assets and to determine whether they remain fit for purpose. “One place to start when trying to track down missing pension is the UK Government’s Pensions Tracing Service,” explained James. “This is an online database which provides current contact details for past and present pension schemes and it therefore requires the individual to know the name of their former employer, pension scheme or provider. The Department of Work & Pensions is also working with the pensions industry, regulators and technology firms with a view to launching Pensions Dashboards - the aim of which is to provide a consolidated view of all pensions owned by a saver alongside the State pension. Such a development is urgently needed, however there are serious concerns about whether this will be able to be achieved by the targeted launch date of April 2019. The DWP has fallen behind schedule in publishing a feasibility study.”

James concluded: “Of course tracking missing plans down is only a first step in sorting out a pension mess. Existing plans need to be reviewed to make sure both the investment approach is suitable and the returns being delivered are up to scratch and that the plans are able to cope with the improved flexibilities introduced in recent years, including the ability to pass these on after death. Many old schemes are not able to cope with these new and appealing features and really do need to be reviewed.

“Consolidating scattered pension with a single plan can certainly help improve control, providing the new plan offers a wide and flexible choice of investment options. But before transferring a pension it is vital to ensure no hefty penalties will incurred or valuable benefit are lost, so it is really important to take professional financial advice.”

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About the research

The research was conducted by Opinium for Tilney via an online survey in April 2018. It looked at the attitudes of 1,293 nationally representative UK adults (aged 18+) who had at least one workplace pension.