In the UK, 88% of people with workplace pensions have at least one that remains unclaimed, according to new research from wealth manager Netwealth.
This amounts to an average of £28,000 per person, a sizeable lost sum that could otherwise be put to meaningful use when employees reach retirement amidst a backdrop of high inflation and living cost increases.
Savers with legacy pots lying dormant are also at risk of not having the full financial potential of these assets realised over time; accounts sitting with providers charging high management fees will unnecessarily erode the value of these savings.
Charlotte Ransom, CEO and Founder of Netwealth said, “It is understandable that in the current climate of market volatility and the cost-of-living crisis, there is a growing fear among investors that their savings won’t go far enough in later life, especially with average lifetimes extending, requiring more substantial retirement savings.
“Now more than ever, it is vital that consumers track down any stranded pensions that they have worked hard to earn, and that they act to recover them sooner rather than later to regain control over these important pools of value.
“Savers need to be protecting and fully maximising the value of their retirement savings, ensuring their assets are working as hard as they could be when it comes to delivering financial returns.”
Challenges tracking pensions set to persist
An individual will change jobs a number of times throughout their professional career, causing many to amass multiple pensions over a lifetime, and the responsibility to keep track of these key tax efficient retirement pots falls to their owners.
With multiple pots comes mounting paperwork and admin, and the challenge to oversee all of these pensions is evidenced by the fact that among workers who have lost track of a pension, 42% say that between 2-5 of their various pots are now stranded.
This was particularly true for female respondents, with half (50%) of women who confirmed a pension pot remains unclaimed saying that they do not have sight of or access to up to five company pensions accrued throughout their careers.
Ransom added, “It is very common to have several pools of retirement assets during our lifetime, and it is often difficult to successfully and actively track all of them, especially if they are sitting with multiple providers over a long period of time.
“The high number of stranded assets is clearly concerning, obstructing consumers from having a holistic view across all of their wealth in aggregate in order to be able to plan forward with confidence and identify the funds needed for key milestones.
“We can all do more to support consumers on their retirement planning journey and – once stranded assets are found – the full benefits of using financial planning tools such as MyNetwealth can be game-changing. Our dashboard is free to users who can track the value of all their holdings regardless of provider and use the intuitive projection tool to see whether they are set to reach their future monetary goals.
“For those who then decide they would like to speak to an adviser to discuss their arrangements, they can choose between a financial planning guidance session or full-blown regulatory advice.”