1 in 6 adults have tried to trace a lost pension — here’s what you need to know

One of the most important financial decisions you’ll make in life is how you deal with your pension.

After all, today’s hard work provides tomorrow’s reward, and for many that means meeting their long-term goals and unlocking their desired lifestyle. A sizeable pension goes a long way towards achieving that aim.

Unfortunately, many Brits are a long way off from reaching those goals and face the prospect of a retirement income shortfall. However, a possible solution could be lying safely hidden away.

A report in PensionsAge found that £37 billion has been lost, or is lying dormant, in pension pots — with an average value of £23,215 spread out among 1.6 million UK savers.

A study from Canada Life discovered that 1 in 6 Britons have attempted to trace lost pensions with those that were successful locating on average at least £6,351 and 8% of successful finds recovering dormant pots in excess of £20,000.

So, could an unconventional treasure hunt potentially be a way of making up any possible shortfalls in your retirement income? Read on to discover the benefits of locating a lost pension and why it could be vital to helping you meet your long-term goals.

A £37 billion treasure lies dormant across 1.6 million UK savers’ misplaced pension pots

As covered by PensionsAge, tracing a misplaced pension pot or two, among the £37 billion worth across the UK, might be a potential solution to any shortfall issues and ensure that you remain on track to meet your long-term goals.

According to MoneyAge, 28% of Britons have saved money across potentially three or more pension pots over the course of their careers. Tracking multiple plans can make it easy to misplace older schemes as the years and decades pass by.

Andrew Tully, technical director at Canada Life, highlighted the problem many Brits are facing when he said: “The lost pensions challenge in the UK has grown significantly in recent years, further exacerbated by the pandemic which resulted in a large proportion of people moving jobs”.

There is a decent likelihood that you may have unknowingly misplaced some valuable pension savings across the span of your working life and the benefits of locating them could be substantial.

Tracing lost pensions is a relatively simple and free process

The first step is to establish where you believe you might have a lost pension and reach out to old employers if you believe they might be able to help. Failing that, the government’s service should be able to help.

The government’s Pension Tracing Service is free to use and can assist you in tracing any pensions you’ve lost over the years, even if you don’t recall some of the key details about your previous pension provider.

To speed up the process it is important to try and locate as much information as possible before hand, which might include:

  • The name of any previous employer or pension service
  • Key employer information such as trading names, business addresses, and the relevant industry
  • Dates you believe you belonged to their pension scheme
  • Your personal details including National Insurance number

While it is possible you might not find anything, there is no harm in trying. If you do locate a lost fund or two, it might be worth considering beneficial next steps.

Locating a lost pension could benefit your pension pot in several ways

For many soon-to-be-retirees, there is a looming pension shortfall between what they’ve currently managed to save and what will be needed to unlock their desired retirement lifestyle.

It can sound scary but don’t panic! There are many practical ways to avoid a pension shortfall upon retirement and locating a lost pension fund is one of them.

Discovering a lost pension pot can be beneficial beyond the value of fund at the time you lost track of it. This is because of the benefit of “compound interest”.

Compound interest can see a pot’s value significantly increase over time

Albert Einstein is thought to have jokingly said “the most powerful force in the universe is compound interest”.

When building your retirement savings, one of the most vital tools at your disposal is simply — time. This especially comes into play with the growth generated by “compound interest” on your pension savings. Any interest gained by the fund is reinvested, essentially creating a cycle of “interest on interest” that can grow the value of your lost pot exponentially over time.

Remember: even small contributions, given time, can grow into impressive sums.

If you have misplaced pension pots that have been quietly generating compound interest for years or even decades, they may have seen significant growth on the amount you initially contributed.

Once located, consolidating your lost pots can reduce stress and make savings

Consolidating your pots can reduce some of the higher charges associated with older schemes and potentially lead to considerable savings. In addition, managing one single pot is a lot less time consuming and hassle than overseeing several different pots.

The time saved could be hugely beneficial on its own, as the old adage goes – time is money. It is likely to relieve a lot of stress off your shoulders and free you up to focus on other issues.

However, there are some downsides. So, before making any major decisions, you should get in touch with Delaunay Wealth as working with a financial planner as you reach retirement can have real practical benefits for your long-term plans.

Get in touch

The lost pension problem doesn’t look likely to go away anytime soon. According to the Telegraph, data provided by the Department for Work and Pensions (DWP) predicts that there could be as many as 50 million dormant and lost pension pots by 2050.

So, as we approach the end of 2022, perhaps one of your new year’s resolutions should be to go for an unconventional treasure hunt in 2023.

If you are worried about your long-term retirement plans and the possibility of a pension shortfall, you should contact us at mail@delaunaywealth.com or call us on 0345 505 3500.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

Workplace pensions are regulated by The Pension Regulator.