Workers losing track of pension pots could put retirement at risk

The Momentum UK Team 12 April 2013

Workers who regularly change jobs  face uncertainty in retirement as a result of multiple workplace pension pots being lost and forgotten about according to Age UK.

In a survey conducted by the charity, nearly one quarter of those asked were completely unaware of the state of at least one pension pots. Of the 2,300 asked in the survey, about one in five of those who said that their pension savings were missing, attributed lost paperwork as the problem. Age UK claimed that this was creating a pensions "black hole".

With the creation of the governments auto-enrollment pension scheme, the fear is that the problem may become more pronounced, with an estimated 10 million additional people set to join wprkplace pension schemes.

In recent years there has been an increase in workers moving between jobs, with around one quarter of workers under the age of 35 having worked for five employers, making it easier to lose track of pension savings built up with each employer.

With this in mind the government is planning to make transferring pension savings more efficient in an attempt to provide workers with greater levels of clarity, and the Department of Work and Pensions also runs a pension tracking service. This locates lost pensions and notifies the holder, providing them will the relevant information.

Lucy Harmer, head of services at Age UK said:

"It is really important we all set aside time to keep on top of our personal admin, such as organising paperwork and keeping details of any financial products safe and secure,"

"This is especially crucial for pensions, as it may be some years down the line until they need to be accessed."

Malcolm McLean, a consultant at actuarial firm Barnett Waddingham said:

"Regular changes of jobs mean that individuals frequently accumulate a number of small pension pots which, at some point, they need to account for in preparation for retirement.

"Having located all the pensions, the individual should then consider bringing them together and purchasing a single annuity. It would normally give them a better return for their money than seeking to obtain a number of small annuities from different pension pots.

"Getting the right type of annuity and shopping around for the best deal are also a must."