Being unfamiliar with your workplace pension can cause serious financial issues in retirement
A post-pandemic pension alarm is being sounded for millions of workers at risk of losing retirement pots built up during lockdown.
Unemployment, furlough and new jobs as the economy returns to normal after Coronavirus means many people will struggle to keep track of their old age savings, experts warn.
A typical employee moves jobs eleven times in a working lifetime and tens of thousands of pounds could be lost to them in retirement if they lose track of their pensions.
And younger workers would be hit hardest financially if their lost pensions were allowed to stagnate for decades.
More than half (54 percent) of working 18-24-year-olds have no idea whether they have a workplace pension or not, according to latest research from pension consolidator Zippen.
A further 45 percent were unable to confirm how many pensions they may have.
Keeping on track of your pension pot is even more important these days
Stuart Feast, Zippen founder and director, said: “Millions of workers, both young and old, are still in the dark about the entire workplace pension concept.
“This might not be a problem in the immediate term, but could create serious issues further down the line.
“Many workers are worryingly unaware that pension pots do not automatically move as they move jobs.
“Employees may end up with dozens of small pots of money that are difficult to manage and keep track of.
“And as we move into a post-pandemic economic phase, keeping track of your pension pot has never been more essential.
Savers are being urged to check whether they are losing any savings after official data showed a staggering £291bn in dormant pots between 2016 and 2018.
This has almost doubled from £139bn in 2012 to 2014 when auto-enrolment into a workplace pension scheme had just been introduced.
Research from the Association of British insurers in May found there were about 1.6m pension pots worth £19.4bn which were going unclaimed.
Meanwhile the government predicts that there could be as many as 50m dormant and lost pensions by 2050.
And retirement experts 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.
Duncan Watson, chief executive of pension administrator EQ, encouraged workers to check if they have any savings they are unaware of to help boost their finances.
Mr Watson said: “The sheer scale of preserved Defined Contribution pension wealth is astonishing – it is around £65bn more than the value of DC pots that people are currently paying into.
“Not all of this £291bn figure is forgotten pensions. It’s 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.”
The Bank of England expects unemployment to rise to 5.5 percent in the autumn, before slowly beginning to recover.
Mr Feast added: “Around 4m workers were still on furlough at the end of March 2021 but will they have their jobs when the furlough scheme ends in September?
“And what will happen to millions of worker pension pots?”
The Government’s much-anticipated Pension Dashboard – designed to show employees how many pension pots they have and who manages them – still has no launch date.
Lori Bavetta, 29, below, had six different pension pots built up as she climbed the career ladder through several jobs from the age of 18.
The London-based recruitment consultant knew she should do something about them, but a busy lifestyle and a lack of understanding held her back.
“I have to admit I didn’t spend a lot of time thinking about the savings, I didn’t really think about the pots as pots of real money,” she said.
“But I was bothered I would lose track of a couple and I know saving for a pension is important which is why I joined the schemes in the first place.”
Lori Bavetta, 29, had six different pensions
Her last company asked for volunteers to undergo a trial pension review when they were looking for retirement experts to advise staff.
“I volunteered straight away because I wanted to know what I had and how much they were worth and if it was possible to simplify the six down into one scheme.
“It turned out I had more than £5,000 just stagnating doing nothing and I was paying charges several times over on the different pots.
“The Zippen advisor told me they could all be amalgamated which would give me more money to invest and cheaper charges because I would only be paying for the one pot.
“Now I can go to one website and watch the pot grow and, to be honest, it’s a weight off my shoulders. I’m now completely on track and there’s nothing forgotten.”
*If you want to track down a lost or forgotten pension, the Government’s Pension Tracing Service is on 0800 731 0193.